The Walt Disney Company has made it clear that it wants more control of its distribution channels and the retail relationship with people watching Disney content in future. The company has announced a new Disney-branded direct-to-consumer streaming service for a 2019 U.S. launch, and the roll-out of an ESPN-branded multi-sport video streaming service in early 2018. These services will be available for purchase directly from Disney and ESPN, in app stores, and from authorized MVPDs (Pay TV operators).
To further ensure it has control of its own destiny online, the Disney will take a large-majority stake in BAMTech, an important streaming technology/platform provider that already underpins direct-to-consumer services from NHL, MLB, PGA Tour, WWW Network and others. BAMTech is considered a leader in its field and includes marketing services, data analytics and commerce management among its capabilities.
Disney has accelerated its option to grow its existing 33% to 75%. The company is paying $1.58 billion for the new shares. The transaction is subject to regulatory approval.
“The media landscape is increasingly defined by direct relationships between content creators and consumers, and our control of BAMTech’s full array of innovative technology will give us the power to forge those connections, along with the flexibility to quickly adapt to shifts in the market,” said Robert A. Iger, Chairman and Chief Executive Officer at The Walt Disney Company. “This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the company, one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands.”
The launch of the direct-to-consumer Disney streaming service was particularly newsworthy because it means Disney is also ending its deal with Netflix for subscription streaming of new releases. From the start of 2019, the new Disney-branded streaming service will be the exclusive home of SVOD viewing for new Disney and Pixar movies. The company says it will also make a significant investment in an annual slate of original movies, TV shows, short-form content and other Disney-branded exclusives for the service, and there will be a vast collection of library content, including Disney and Pixar movies and Disney Channel, Disney Junior and Disney XD television programming.
Meanwhile, the ESPN-branded multi-sport service will offer a robust array of sports programming, featuring around 10,000 live regional, national and international games and events a year, including Major League Baseball, National Hockey League, Major League Soccer, Grand Slam tennis and college sports. Individual sport packages will also be available for purchase, including MLB.TV, NHL.TV and MLS Live.
This new service will be accessed through an enhanced version of the current ESPN app. In addition to the multi-sport service, the ESPN app will include the news, highlights and scores that fans enjoy today. Consumers who are Pay TV subscribers will also be able to access the ESPN television networks in the same app on an authenticated basis. “For many sports fans, this app will become the premier digital destination for all their sports content,” Disney says.
As for Netflix, we should not be too concerned for the company when it loses access to the new Disney SVOD content, according to the Munich-based analyst firm Veed Analytics. “Disney’s contribution to the Netflix success should not be overestimated. It is clearly valuable content which might be missed on the service but Netflix realised that it needs to become more independent from its content suppliers and, slowly but steadily, has intensified its Originals initiative and has become a studio by itself.”
Veed Analytics notes that, so far, only current Disney movies are being removed, which means that the Marvel brand stays on the service at this point. “The situation for Netflix would look slightly different if further studios pulled their current titles from the service. Netflix could cover that to a certain extent with its Originals, but would then lack breadth,” the firm warns.
Veed says Disney is pursuing a long-held strategy to be close to its consumers (think about its merchandising) but reckons it will struggle to match the commercial success of its merchandising business on an SVOD service. “Disney could leverage its strong position in the kids series sphere to increase the stickiness of the service,” it adds.
“Disney has spent quite a lot of tech money through its investment in streaming expert BAMTech. That is a heavy up-front investment but certainly the right move to compete with the likes of Amazon and Netflix,” Veed Analytics adds.
