Dis­ney ex­ec­u­tives re­veal de­tails on new stream­ing ser­vice

The Buffalo News - - BUSINESS NEWS - By Steven Zeitchik WASH­ING­TON POST

BUR­BANK, Calif. – For nearly two years, the en­ter­tain­ment industry has talked about, fret­ted over, lamented and lauded the stream­ing ef­forts of Dis­ney, one of the coun­try’s most es­tab­lished legacy con­tent firms.

On Thurs­day, it fi­nally of­fered a glimpse into what all the mur­mur­ing was about.

“A core tenet since Walt Dis­ney founded the com­pany is to cre­ate change and not just sit back and watch it hap­pen,” Dis­ney chief ex­ec­u­tive Robert Iger said, ad­dress­ing a so-called “In­vestor Day” on the stu­dio’s lot. “Bor­row­ing from one of Walt’s great­est strengths takes courage,” he added, not­ing that the ser­vice, called Dis­ney+, will demon­strate a lot of that.

The ser­vice will be launched Nov. 12, and will cost $6.99 a month – or $69 an­nu­ally (which works out to $5.83 a month).

It’s easy to un­der­stand why in­ter­est in Dis­ney’s stream­ing ser­vice has swirled since the mid-2017 an­nounce­ment. Dis­ney is the dom­i­nant en­ter­tain­ment firm of our time, pro­duc­ing and re­leas­ing blue-chip con­tent from Marvel to Pixar to Lu­cas­film. And af­ter watch­ing Net­flix build an em­pire in part on the back of Dis­ney’s own li­brary, it’s strik­ing back.

A legacy com­pany has not taken on a world that has been dom­i­nated by Silicon Val­ley, not like this.

There’s Hulu, ag­gre­gat­ing the con­tent of the big­gest con­tent providers (in­clud­ing Dis­ney) with a sprin­kling of new shows. (The ser­vice was part of Dis­ney’s in­vestor-day pro­mo­tion.) And there’s CBS All Ac­cess, which has gone for a piece of the stream­ing busi­ness with its own shows. But a sin­gle com­pany bring­ing ev­ery­thing in-house and so­lic­it­ing con­sumers the way Dis­ney is re­mains new.

The ser­vice will fo­cus on high­end brands such as “Star Wars” and “Toy Story” more than on Net­flix’s volume busi­ness. Dis­ney+ will be, for in­stance, the home for all the­atri­cal movies re­leased by Dis­ney. It will also even­tu­ally be the home for its clas­sic film li­brary (still living in other places un­der cur­rent deals).

The com­pany also of­fered some more de­tails on how it would carry outs its plans.

The com­pany said that Roku and Plays­ta­tion are the plat­forms where Dis­ney+ will cer­tainly be avail­able, with “a full ar­ray of plat­forms in place” come launch.

It also showed off the in­ter­face, which ap­pears pretty straight­for­ward – five tiles for its five con­tent pillars on its home-screen. Users are able to click on one of them and then a few of the new and orig­i­nal ti­tles. That marks a con­trast to Net­flix and other ser­vices which rely on a much larger mix of ti­tles and search func­tions and al­go­rithms to find them.

Dis­ney+ will launch with plenty of orig­i­nals: 25 new episodic se­ries and 10 movies in year one. By year five the for­mer will go to 50 but the movie num­ber will re­main con­stant.

Dis­ney CFO Chris­tine Mc­Carthy said that Dis­ney+ will prob­a­bly lose money be­tween now and 2023, “peak­ing” be­tween 2020 and 2022. Prof­itabil­ity can be ex­pected in 2024.

De­spite those losses, the com­pany is bet­ting that the cost, and the pop­u­lar­ity of its of­fer­ings, will in­duce high num­ber of sub­scrip­tions. There will be no free ad-cen­tric op­tion, Mayer said.

The event fol­lows Ap­ple’s rev­e­la­tion of its stream­ing plans sev­eral weeks ago at a sim­i­lar pub­lic gath­er­ing at its head­quar­ters. The con­trasts be­tween the two pre­sen­ta­tions were strik­ing. Ap­ple was high on flash and low on in­for­ma­tion. Dis­ney was ba­si­cally the op­po­site.

But broader un­cer­tain­ties re­main. Not yet de­ter­mined is whether Dis­ney re­ally has the nim­ble­ness and dig­i­tal savvy to pull off the movie. Or is it ex­actly the right move, if en­ter­tain­ment should in­deed be dom­i­nated by the peo­ple who know it best and have done it long­est.

Also not known is how much Dis­ney+ will dis­rupt the stream­ing busi­ness gen­er­ally. Many peo­ple sub­scribe to Net­flix be­cause of the sheer breadth of its of­fer­ings – the com­pany throws so much at the wall, and there is some­thing in it for ev­ery­one (or, at least, 140 mil­lion sub­scribers world­wide).

Dis­ney is try­ing a dif­fer­ent tack to reach those massive amounts of peo­ple: of­fer just a few things, but make sure it’s the kind of “Star Wars”-ian con­tent ev­ery­body wants – and at a low cost.

Re­search sug­gests the typ­i­cal Amer­i­can sub­scribes to barely more than two stream­ing ser­vices.

That’s a small tar­get for Dis­ney to hit, what with Net­flix al­ready gar­ner­ing 60 mil­lion Amer­i­cans, Ama­zon and HBO Now well es­tab­lished and Ap­ple com­ing in. (Ama­zon chief ex­ec­u­tive Jeff Be­zos owns The Wash­ing­ton Post.)

Can Dis­ney, with the help of its new shiny of­fer­ings, wean peo­ple off one or more of those ser­vices? Or, bet­ter yet for the industry, can it grow the mar­ket and the av­er­age num­ber of ser­vices to which peo­ple sub­scribe?

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