Dis­ney to launch stream­ing ser­vices for movies, live sports

Kuwait Times - - TECHNOLOGY -

With new stream­ing ser­vices in the works, Dis­ney is try­ing to set it­self up for a fu­ture that’s largely been framed by Net­flix: Pro­vid­ing the stuff you want to watch, when you want to watch it. The Magic King­dom is launch­ing its own stream­ing ser­vice for its cen­tral Dis­ney and Pixar brands and an­other for live sports. That would al­low it to by­pass the ca­ble com­pa­nies it re­lies on - and Net­flix - to charge con­sumers di­rectly for ac­cess to its pop­u­lar movies and sport­ing events.

“They’re bring­ing the fu­ture for­ward. What they talked about were things that looked in­evitable, at some point,” said Piv­otal Re­search Group an­a­lyst Brian Weiser. What’s less clear is if Dis­ney will be able to make big bucks from it, he said. This is im­por­tant as the de­cline in ca­ble house­holds and the shift to smaller, cheaper bun­dles pres­sures the prof­itabil­ity of Dis­ney’s ca­ble net­works. Fewer sub­scribers and fewer view­ers mean less money. In the nine months through July 1, ca­ble net­works’ op­er­at­ing in­come fell 13 per­cent from the year be­fore, to $4.12 bil­lion.

Kid stuff

Start­ing in 2019, the only sub­scrip­tion stream­ing ser­vice with new an­i­mated and liveaction Dis­ney and Pixar movies will be the Magic King­dom’s own app. That will in­clude “Toy Story 4” and the se­quel to the huge hit “Frozen.” Older movies will be there too, as well as shows from the TV chan­nels Dis­ney Chan­nel, Dis­ney Ju­nior and Dis­ney XD, and orig­i­nal TV and films. That could be hugely at­trac­tive for fam­i­lies with young chil­dren in the US.

Dis­ney is end­ing an ex­clu­sive ear­lier movie deal with Net­flix, and the stream­ing gi­ant’s shares tum­bled in af­ter-hours trad­ing. Net­flix to­day has grown into an en­ter­tain­ment jug­ger­naut in its own right, how­ever, as it fo­cuses more on its own ex­clu­sive pro­gram­ming. Net­flix al­ready seemed to be brac­ing for the po­ten­tial loss of the Dis­ney movie rights ear­lier this week when it an­nounced its first-ever ac­qui­si­tion - the pur­chase of Mil­lar­world , a comic book pub­lish­ing com­pany that will de­velop films and kids shows based on its port­fo­lio of char­ac­ter.

Dis­ney might bring more of its prop­er­ties par­tic­u­larly its Marvel su­per­heroes and the Star Wars fran­chise - un­der its wing, and could even of­fer them as sep­a­rate stream­ing ser­vices. CEO Robert Iger said Dis­ney is con­sid­er­ing whether it should con­tinue li­cens­ing Marvel and Star Wars movies to out­side ser­vices like Net­flix, move them into the Dis­ney app or de­velop in­di­vid­ual ser­vices for them. The Dis­ney ser­vice will be avail­able in “mul­ti­ple mar­kets” out­side the US as well, tak­ing ad­van­tage of Dis­ney’s global name recog­ni­tion.

Dis­ney had al­ready said it would be launch­ing a stream­ing ESPN ser­vice. It’s not meant to com­pete with the com­pany’s TV chan­nels. The sports ser­vice is com­ing in early 2018, a lit­tle later than pre­vi­ously an­nounced, and will air base­ball, hockey and soc­cer games, ten­nis matches and col­lege sports through ESPN’s pop­u­lar mo­bile app. No­tably, ESPN will not be stream­ing pro foot­ball or basketball, at least ini­tially. Cus­tomers will also be able to buy fuller stream­ing pack­ages from the base­ball, hockey and soc­cer leagues, and watch them on the ESPN app.

“Ul­ti­mately, we en­vi­sion this will be­come a dy­namic sports mar­ket­place that will grow and be in­creas­ingly cus­tom­iz­a­ble, al­low­ing sports fans to pick and choose con­tent that re­flects their per­sonal in­ter­ests,” Iger said on a con­fer­ence call with an­a­lysts. Dis­ney will have to be care­ful that it doesn’t trans­fer too much sports pro­gram­ming from its TV chan­nels to the app. Get­ting the bal­ance wrong could up­set ca­ble com­pa­nies and weigh on the price they pay Dis­ney for ESPN, Weiser said.

The back end

To roll out its stream­ing ser­vices, The Walt Dis­ney Co. will take ma­jor­ity con­trol of BAMTech, a stream­ing arm of Ma­jor League Base­ball spun off last year from Base­ball Ad­vanced Me­dia, for $1.58 bil­lion. When the deal closes, Dis­ney will own 75 per­cent of BAM Tech, up from the 33 per­cent stake it ac­quired for $1 bil­lion as part of an agree­ment an­nounced last year. The ac­qui­si­tion and the new ser­vices will be “an en­tirely new growth strat­egy” for Dis­ney, Iger said.

The new stream­ing ser­vices will likely “ac­cel­er­ate the ero­sion” of Dis­ney’s TV net­works, es­pe­cially if other ma­jor ca­ble net­works make sim­i­lar moves, said Moody’s an­a­lyst Neil Be­g­ley. But Iger ar­gues that BAMTech gives Dis­ney “op­tion­al­ity” if the ca­ble ecosys­tem changes fur­ther, Iger said on a con­fer­ence call with an­a­lysts Tues­day. If there’s greater “ero­sion” - say, if more peo­ple drop ca­ble bun­dles or choose cheaper bun­dles with­out key Dis­ney chan­nels - the com­pany has more ways to get its en­ter­tain­ment di­rectly to cus­tomers, Iger said.

He said there are no cur­rent plans to sell the Dis­ney or ESPN TV chan­nels di­rectly to cus­tomers on the apps. But hav­ing a di­rect re­la­tion­ship with cus­tomers tells Dis­ney ex­actly what they’re watch­ing, giv­ing it pow­er­ful tools and in­for­ma­tion that could help feed de­ci­sion-mak­ing and, on the sports side, sell ad­ver­tis­ing.—AP

NEW YORK: In this photo, The Walt Dis­ney Co. logo ap­pears on a screen above the floor of the New York Stock Ex­change.—AP

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