Dis­ney en­lists su­per­fans as it pre­pares face off against Net­flix

At D23 con­ven­tion, Dis­ney faith­ful sign up for stream­ing ser­vice of­fered at a deep dis­count

The Standard (St. Catharines) - - Business - ERICH SCHWARTZEL

ANA­HEIM, CALIF.—Jolie Nin­ness is a mega Dis­ney fan—and Net­flix Inc.’s worst night­mare.

The 29-year-old med­i­cal-of­fice em­ployee from San Diego came to D23, an an­nual gath­er­ing of Walt Dis­ney Co.’s most ar­dent fans, and quickly signed up for a three-year sub­scrip­tion to Dis­ney+, the com­pany’s forth­com­ing stream­ing ser­vice. Once it ar­rives in Novem­ber, she plans to can­cel her Net­flix sub­scrip­tion and in­stead opt for the clas­sic Dis­ney ti­tles and “Simp­sons” episodes avail­able on Dis­ney+.

Ms. Nin­ness was one of hun­dreds of con­sumers to sign up for the three-year deal, priced at roughly $141, at the last D23 con­ven­tion be­fore Dis­ney+ is launched. If enough con­sumers like Ms. Nin­ness are on board when the ser­vice pre­mieres, it could sig­nal that Dis­ney can go head-to-head with en­trenched com­peti­tors such as Net­flix and Ama­zon.com Inc.’s Prime Video.

Dis­ney’s high-pro­file—and costly—at­tempt to com­pete in the stream­ing ecosys­tem was cen­ter stage at D23, where a slew of new shows and movies for the ser­vice was an­nounced. Dis­ney has an ar­guably un­matched abil­ity to cross-pro­mote its top pri­or­i­ties, whether at fan events like D23, at its theme parks or on its ABC net­work. But to at­tract a core base of subscriber­s, the com­pany is of­fer­ing sub­scrip­tion deals that come out to more than 70% off the cost of Net­flix.

The three-year of­fer, cur­rently only avail­able to those at­tend­ing the con­ven­tion, will be open to any D23 club mem­ber through Sept. 2.

In a sign of D23’s im­por­tance to the com­pany, the pre­sen­ta­tion oc­cu­pied the largest hall at the Ana­heim con­ven­tion cen­ter and was kicked off by Kevin Mayer, a long­time Dis­ney ex­ec­u­tive in charge of its stream­ing ef­forts who is seen by an­a­lysts and com­pany in­sid­ers as a po­ten­tial suc­ces­sor to Chief Ex­ec­u­tive Robert Iger.

The Dis­ney+ li­brary will in­clude pro­gram­ming from es­tab­lished fran­chise en­gines such as Marvel Stu­dios and Lu­cas­film Ltd., but the D23 pre­sen­ta­tion made it clear Dis­ney also wants to com­pete with Net­flix in re­al­ity shows and non­fic­tion pro­gram­ming.

“We have the brands that mat­ter most,” said Mr. Mayer. Net­flix de­clined to com­ment. At kiosks on the D23 con­ven­tion floor, fans lined up to en­ter credit-card in­for­ma­tion and sign up for a three-year sub­scrip­tion, a com­mit­ment that also grants them ac­cess to the “Dis­ney+ Founders Cir­cle.”

The D23 of­fer is about 33% off the usual price for three years of Dis­ney+, but what Dis­ney loses in rev­enue it might make up for in en­thu­si­asm on Wall Street.

Dis­ney is com­pet­ing with Net­flix, which al­ready has more than 150 mil­lion subscriber­s, and Ama­zon Prime, which has more than 100 mil­lion. In­vestors want to see proof that Dis­ney can quickly build up a sub­scriber base that puts it on par with those ser­vices.

At an event for in­vestors ear­lier this year, Dis­ney said it ex­pects to have be­tween 60 mil­lion and 90 mil­lion subscriber­s by the end of fis­cal 2024, at which point it should achieve prof­itabil­ity.

To get there, Dis­ney has said it ex­pects to make a cash in­vest­ment of more than $1 bil­lion in fis­cal 2020, go­ing up to about $2.5 bil­lion by 2024. The com­pany is pulling its movies and shows from Net­flix in prepa­ra­tion for the Dis­ney+ launch, a de­ci­sion the com­pany has said will cost it about $150 mil­lion in op­er­at­ing in­come—but that also de­prives Net­flix of pop­u­lar pro­gram­ming in­clud­ing Marvel and Star Wars ti­tles.

Dis­ney+ is to launch in sev­eral

in­ter­na­tional mar­kets this year, rep­re­sent­ing po­ten­tial com­pe­ti­tion for Net­flix’s plans for over­seas ex­pan­sion. And the new Dis­ney ser­vice’s fo­cus on fam­i­lyfriendly pro­gram­ming could eat into Net­flix’s sub­scriber base of par­ents who rely on the ser­vice to en­ter­tain their chil­dren.

In July, Net­flix dis­closed that it had lost about 126,000 U.S. subscriber­s in the sec­ond quar­ter, news that sent its stock price fall­ing. But the com­pany—which will soon also face stream­ing com­pe­ti­tion from Ap­ple Inc., Com­cast Corp. and AT&T Inc.— re­mains the one to beat, given its multi­bil­lion-dol­lar pro­gram­ming bud­get and an al­go­rithm honed by many years’ data on users’ tastes.

Dis­ney, it seems, is bor­row­ing from that play­book in more ways than one. A demon­stra­tion of Dis­ney+ at D23 showed an in­ter­face that re­sem­bles the Net­flix dash­board, with rec­tan­gu­lar im­ages high­light­ing each movie or show and pro­gram­ming di­vided by Dis­ney di­vi­sions such as Marvel and Pixar. Users can set up sep­a­rate pro­files for dif­fer­ent mem­bers of the fam­ily, as they can on Net­flix, or choose a kid­sonly op­tion, also like Net­flix.

One woman signed up for Dis­ney+ at D23 to give her grand­chil­dren some­thing to watch. Another fan picked up the three­year deal be­cause he no­ticed his fa­vorite Marvel Stu­dios movies were slowly dis­ap­pear­ing from Net­flix.

In ad­di­tion to the li­brary of older Dis­ney ti­tles, the com­pany is pro­duc­ing new shows and

movies ex­clu­sively for Dis­ney+. Some of the mar­quee shows in­clude a “High School Mu­si­cal” se­ries and “The Man­dalo­rian,” a new Star Wars story.

If the re­ac­tion of Dis­ney fans at the con­ven­tion was any in­di­ca­tion, the pro­gram­ming strat­egy was work­ing. The an­nounce­ment that Ewan Mc­Gre­gor would be repris­ing his role as a young Obi-Wan Kenobi in another new Star Wars se­ries prompted cheers. News that Hilary Duff would be play­ing Lizzie McGuire again in a re­boot of the epony­mous se­ries caused one young woman in the au­di­ence to hy­per­ven­ti­late and say, “I can’t be­lieve this is hap­pen­ing.”

Of course, at D23 Dis­ney was play­ing to the faith­ful. The broader mar­ket­place brings a slew of chal­lenges, es­pe­cially as house­holds weigh how many stream­ing ser­vices are suf­fi­cient. So far, Dis­ney’s in­ex­pen­sive price point-—$6.99 a month with­out any dis­count—is con­sid­ered a ma­jor ad­van­tage. Ear­lier this month, Dis­ney said it would bun­dle its other stream­ing ser­vices, ESPN+ and Hulu, for a monthly fee of $12.99, or the cost of a Net­flix sub­scrip­tion.

Dis­ney is lean­ing es­pe­cially hard on its Marvel Stu­dios, best known for the­atri­cal block­busters such as “Avengers: Endgame,” to draw in subscriber­s. Marvel is pro­duc­ing eight su­per­hero shows for the ser­vice that will com­ple­ment its film slate.

At D23, Marvel Stu­dios head Kevin Feige an­nounced three shows for the ser­vice, all min­ing

the comic-book vault for new char­ac­ters such as a Mus­limPak­istani teenager known as Ms. Marvel, and She-Hulk, a fe­male ver­sion of the fe­ro­cious green beast.

“She’s a Hulk. She’s a lawyer,” Mr. Feige ex­plained.

A slate of non­fic­tion, doc­u­men­tary-style shows, in­clud­ing one about work­ing at Dis­ney, will be on the ser­vice, as well as re­al­ity shows such as a cook­ing com­pe­ti­tion called “Be Our Chef” and “Encore!,” which fol­lows groups of adults as they restage the high­school mu­si­cals of their youth.

But for many fans at D23, the ap­peal of Dis­ney+ was get­ting more of what they know.

Irene Rocha, a 39-year-old ex­ec­u­tive as­sis­tant from Car­son, Calif., paid for three years of the ser­vice to keep watch­ing the Marvel Stu­dios and Star Wars movies that will soon be ex­clu­sive to it.

She will add the cost to a stream­ing bun­dle she has fash­ioned for her­self that in­cludes Hulu, Net­flix and Ama­zon Prime. New Dis­ney+ pro­gram­ming such as “The Man­dalo­rian” is driv­ing her to sub­scribe, but so is the clas­sic li­brary of older ti­tles such as the an­i­mated “Lion King” that will be avail­able any­time.

“I don’t need to bust out my old VHS tapes,” said Ms. Rocha.

Correction­s & Amplificat­ions The three-year of­fer for Dis­ney+ will be open to any D23 club mem­ber through Sept. 2. An ear­lier ver­sion of this ar­ti­cle in­cor­rectly stated the of­fer would be open to any D23 club mem­ber start­ing in Septem­ber.


Dis­ney chair and chief creative of­fi­cer Alan Horn speaks dur­ing a pre­sen­ta­tion at D23, where the com­pany’s at­tempt to com­pete in the stream­ing ecosys­tem took cen­tre stage.

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