Disney’s plan to battle Netflix takes it to new high
Investors welcome the Hollywood giant’s entry into the streaming market, as Bob Iger signals his exit
DISNEY shares surged to an all-time high yesterday after it revealed aggressive plans to tackle the rise of Netflix with its own streaming service.
The Hollywood powerhouse is preparing to launch Disney+, an internet video subscription carrying the full gamut of films and television from Disney, Marvel, Star Wars, Pixar and National Geographic.
Chairman Bob Iger told investors that it will debut in the US in November at $6.99 (£5.35) per month, substantially cheaper than Netflix at $12.99 for its standard subscription.
Disney shares surged as much as 12pc on Friday, hitting a record high of $130.90 and valuing Hollywood’s biggest studio at more than $230bn. Netflix sank up to 5pc, though it remained up more than a third this year.
Details of the British launch of Disney+ were not released. Disney is currently tied into an exclusive rights deal with Sky until next year. It would need to break up or at least downgrade a relationship dating back to the dawn of the British pay-tv industry in order to sell Disney+ subscriptions itself, as it intends to on home turf.
Mr Iger has been gradually taking back control of distribution in preparation for his global push into streaming and so-called direct-to-consumer operations. Though it is one of the world’s most recognisable brands, Disney has to date been an overwhelmingly wholesale business, dealing with paytv and cinema operators.
To execute the radical change in strategy, Mr Iger aims to ensure that Disney+ has exclusive rights to the studio’s back catalogue as well as new productions, to create more incentives for consumers to sign up. Disney has also stopped providing programming to Netflix, which initially built its subscriber base on material sourced relatively cheaply from traditional studios and broadcasters who did not then see it as a major threat.
Netflix is now investing billions annually in its own productions as the television industry reacts to its success, and its range of suppliers is depleted. The BBC and ITV are also reducing sales of rights to the streaming pioneer as they prepare to introduce their own subscription streaming service, Britbox, later this year.
Disney said it expects to attract up to 90 million subscribers for its streaming service by 2024. Netflix is already closing in on 150 million.
Mr Iger made his latest big move less than a month after Disney completed its $71bn acquisition of most of Rupert Murdoch’s rival studio 21st Century Fox. The deal was presented as part of preparations for Disney+. Mr Iger also gained control of Hulu in the takeover, a US streaming joint-venture that carries more adult-oriented programming such as the Fox animation Family Guy. Disney now plans to roll out Hulu around the world, too.
Mr Iger is racing to adapt Disney to streaming as viewing shifts rapidly. The traditional bundle of US cable channels previously delivered healthy profits to studios but is now under threat as households switch to a pickand-mix of cheaper online options.
Hollywood is also in competition with Silicon Valley to profit from the change. As well as Netflix, Amazon and Apple are building subscription streaming businesses, pouring money into their own programming as well as licensing archives.
Mr Iger, who also sits on the board of Apple, confirmed during the Disney presentation that he plans to retire when his contract as chief executive ends in 2021. A search by the board is already under way for his replacement. He said he had no plans to step down from his role at Apple.