LAS VEGAS – With the Walt Disney Co. planning to launch its widely awaited subscription OTT service, Disney+, this fall, industry analysts and executives are expecting truly enchanted things from the Magic Kingdom
In fact, speaking on a Streaming Summit panel at the NAB Show here last week, some industry experts said recent Wall Street forecasts for Disney+, while seemingly sky-high, may actually prove to be way too low. Most recently, for example, MoffettNathanson predicted that Disney+ will bring in 7.1 million subscribers in its first year and grow to nearly 24 million customers by the end of 2022.
"That number probably needs to be double," said Adam Lewinson, chief content officer for Tubi, which runs a free, ad-supported OTT service in the U.S. He argued that Disney+, fortified by its parent company's brand, marketing muscle and broad array of popular titles and new original content, should have little trouble grabbing a hefty slice of the growing OTT video pie.
Lewinson also sees Disney building the baseline of a new direct-to-consumer business without needing to carve into the subscriber bases of such major rivals as Netflix and Amazon. In contrast, he said, other new SVOD services coming out of the chute from such rival U.S. media giants as AT&T's WarnerMedia, NBCUniversal and even Apple "will have to steal other people's lunch money" to survive and thrive.
Brett Sappington, senior director of research at Parks Associates, agreed with Lewinson that Disney+ has the best shot of all the new OTT entries of striking it rich, thanks to its impressive content catalogue. He said that it would vastly "undershoot" his expectations for Disney+ if it amassed less than 24 million subs globally by the start of 2023
Other industry analysts concurred last week, especially after Disney officials announced Thursday that it plans to charge just US$6.99 per month, or US$69.99 per year, for Disney+ when it launches in North American on November 12. At that price point, Disney+ will be much lower than Netflix, which now charges US$12.99 per month for its standard plan.
In addition, Disney officials hinted about possibly bundling Disney+ with their other OTT video services in the future, like such popular offerings as Hulu and ESPN+. Such a move could further threaten Netflix's current dominance of the OTT market, and if expanded to Canada would surely shake up our video market.
"Get ready for a ton of subs. Content is king." – Dan Rayburn, Frost & Sullivan
"$6.99 for Disney+ streaming?!?!," tweeted Dan Rayburn, a principal analyst at Frost & Sullivan who chairs the NAB Show Streaming Summit, following the Disney pricing announcement late last week. "No word yet on number of simultaneous streams per account, but that is super cheap for the volume of great content they have. Get ready for a ton of subs. Content is king."
At its investors' day conference last Thursday where the company unveiled pricing, content and marketing plans for Disney+, Disney executives indicated they are deliberately pricing the service low at launch to attract as many subscribers as they can as quickly as they can.
"This is our first serious foray into this [direct-to-consumer] space, and we want to reach as many people as possible with it," Disney chairman and CEO Bob Iger said at the investors conference. As a result, Disney execs are looking for the new service to garner tons of subscribers as they aggressively seek to expand it around the world shortly after its U.S. launch.
While it’s unclear at this time, Canadian industry rumours persist that Disney+ will launch in Canada on the same day it launches Stateside. It likely won’t have the same content library, however, as Canadian companies own various rights windows.
Disney CFO Christine McCarthy said company execs are counting on Disney+ to generate anywhere from 60 million to 90 million subs globally by the end of fiscal 2024, with some two-thirds of them coming from outside the U.S. She also sees the service starting to turn a profit in fiscal 2024, while noting that Disney will shell out US$1 billion on original content for the streaming service in fiscal 2020 alone.
Serving up more detail on Disney+, company officials said the new SVOD service will feature a huge roster of TV shows and movies from Marvel, Fox, Star Wars, Pixar and other Disney-owned properties and brands designed to appeal to consumers of all ages. Initially ad-free, the premium service's programing will include about 7,500 TV episodes (including all 30 seasons of The Simpsons), 400 catalog movies, 25 original series, 10 original movies and 100 recent films.
At launch, Disney+ will support a broad range of OTT and streaming video platforms. The service will also enjoy an extensive reach on video-capable devices, supporting web browsers, popular game consoles, smart TVs and a mix of connected-TV devices. In addition, it will offer titles in 4K/HDR and make a sizable portion of its library downloadable for offline viewing.
Despite all the buzz around Disney+, some industry analysts cautioned that the service's success is still not a lock. Speaking on the Streaming Summit panel, for instance, Sappington stressed Disney is taking on additional risk with the direct-to-consumer offering because the company won't have the same guarantees that it now enjoys when licensing its content to other distributors around the globe. "That's really a big bet for Disney," he said.
Corus Entertainment, for example, holds the Canadian rights for a large amount of Disney content and branding.
Plus, the bar for success is rising for top media companies like Disney plunging into the direct-to-consumer streaming market. Eclipsing the 1 million subscriber mark quickly has now become a "low threshold" for the major new SVOD services, Sappington said. Yet, he noted, it's still hard to determine how these new OTT services, such as Apple TV+, will fare until more is revealed about pricing plans and the full composition of their content libraries.
Nii Addy, head of marketing at OTT-TV service Philo, argued judging these new players just by subscriber numbers amounts to a "false equivalency" because each parent company is a bit different and can pull different levers to make its new offering succeed. Citing examples, he noted while Disney+ is a pure content play, Apple can lean on its hardware and software platforms and AT&T has a "full stack" in the home (content, services and hardware) to offer sticky bundled deals.
"I don't know if it [the competition] is going to be head-to-head in that sense," Addy said.
