Disney Makes Streaming Services A Centerpiece Of Its Future

How seriously is Disney taking streaming direct-to-consumer video services?

Starting next year, the Direct-To-Consumer/International business unit will be one of four business segments the company breaks out earnings for in its quarterly reports to investors.

On the company’s latest quarterly earnings call Thursday, Disney CEO Bob Iger went into detail about its streaming video future, with an emphasis on three products: ESPN+, Hulu, and next year’s family-focused service, which Iger says will be called Disney+.

Disney+ will mark Disney’s biggest dive into streaming video, becoming a one-stop shop for Disney movies and content from Pixar, LucasFilm, Marvel, National Geographic and other Disney-owned brands.

Disney is developing a series based on the Marvel character Loki, and on the “Star Wars” film Rogue One. Both will star the lead actors who appeared in the movies.

“As with ESPN+, the launch of Disney+ will just be the starting point,” Iger told analysts on the call. “We plan to continually elevate the experience and enhance the value to consumers with a constant pipeline of exclusive new content as we move forward.”

Iger added that the company will be taking Disney+ international after its U.S. launch, with some local content added to the mix to comply with local rules in the E.U.

Disney will have a controlling stake in Hulu once its deal to acquire 21st Century Fox closes, although Comcast will still own 30% of Hulu, and AT&T will own 10%.

Iger told analysts “anything we do with Hulu will be done with an eye toward being fiscally responsible to the other shareholders, even though they’re minority shareholders.” While the company plans to invest in Hulu, it may not be able to take the big swings it is making with Disney+.

Hulu will serve as a general entertainment service, in contrast to the sports-centric ESPN+ and the family-focused Disney+.

In particular, Hulu presents a distinct opportunity for advertisers through its basic ad-supported tier and multichannel video service.

“[What] I think has been somewhat under-appreciated about Hulu in that it is a very strong play for advertisers, because it can offer targeted ads and is just a great user experience,” Iger said.

He added that the company will invest more in Hulu’s original programming and experiment with pricing, particularly with regard to its multichannel video service.

Hulu is currently only available in the U.S. Once the Fox deal closes, the company will talk to Comcast and AT&T about launching Hulu internationally.

Finally, there was ESPN+, the first streaming service launched by Disney in the U.S. earlier this year. Now with over 1 million subscribers, Disney CFO Christine McCarthy said the company plans to invest $100 million in the service in the first quarter of 2019.

“We’re kind of just in the early innings, to use a sports analogy, of where we’re going to be product-wise,” Iger said. “And then we’re also in the early innings in terms of where we’re going to be from a feature set perspective.”

The company’s BamTech unit is developing personalization and customization technology that will serve subscribers content based on where they live, or their favourite team or sport.

The company will also start marketing ESPN+, beginning by targeting alumni of certain colleges whose teams don’t typically play on national sports networks.

Talk of streaming dominated the earnings call, with the company’s TV networks barely getting a mention from analysts, and only a few questions on the company’s theme parks.

During the company’s earnings call in late 2017, Iger said Disney+ would be priced “substantially below” Netflix, to account for its smaller library of content. He did not provide an update on the latest call, with pricing still TBD.

Disney is betting its content expertise will make for a competitive product with Netflix when it launches.

Source: mediapost.com; 9 Nov 2018

TV Viewers Are Demanding More Options, and Streaming Services Are Happy to Oblige

Same channels, different remote control

The good news: TV lovers still love watching TV. The not as good news: Viewers aren’t watching it in the same way as they used to (and until relatively recently).

Set-top cable boxes have dwindled in popularity over the past four years. As consumers turn to connected TVs and devices, they have less need for a monthly box-rental fee and thousands of channels they don’t watch.

According to a study from Hub Entertainment Research, viewers reported that for the first time since tracking began in 2014, watching TV online was more popular than watching on a set-top box.

About 52 percent of viewers now say they watch their favorite shows online via services like Netflix, Hulu or Amazon, on a network’s own site or app, or via other online services like iTunes. Forty-eight percent of viewers prefer to watch TV live, on DVR or through an on-demand platform.

The emergence of streaming TV

TV started with limited broadcast networks and appointment viewing. If you missed an episode, that was it. Today, consumers can choose what channels they pay for, on what devices they watch those channels, which episodes to watch and when to tune in. Viewers are in control of the remote, and TV networks and providers are trying to be as flexible as their consumers need them to be.

Today, viewers hold all the power. They’re demanding high-quality content on their preferred devices at the time of their choice, and the companies that helped create the disruption and challenge to the status quo have been happy to oblige.

Sling TV is one such example. The skinny-cable bundle launched in 2015 when there was no live TV streaming service letting users control which channels they watch and pay for.

“We saw an opportunity to reach both cord cutters and cord-nevers,” said Jimshade Chaudhari, vp of marketing and management at Sling TV. “Lots of those people were frustrated with traditional TV back then and still are today.”

Sling TV currently provides two subscription plans with many add-on packages, giving users a customizable experience based on the TV channels they actually want to watch.

“The concept from a consumer standpoint caught on right away,” Chaudhari said. “[Viewers had] been waiting a long time for something like this. And as they got familiar with what it was, they got more control and flexibility than they ever got from the traditional cable experience.”

Subscribers to contract-free services like Sling, Playstation Vue, YouTube TV and other similar platforms can cancel any time at no fee, something not all cable companies allow in their contracts. Additionally, many of these platforms are available on multiple smart TV-connected devices like Roku, Apple TV or Amazon Fire TV where viewers can install other apps for entertainment like games or podcasts.

Even though the mechanics of viewership have started to shift, one thing has remained the same—people still love TV.

“It’s an escape for them,” Chaudhari said. “They want entertainment and really easy access to it that they don’t have to think about. Netflix helped drive the watch-on-your-own-time sensibility early on, and now consumers want more flexibility.”

Libraries and live options

Hulu, another pioneer in the entertainment streaming world, has seen the shift on a larger scale. As it celebrates its 10th anniversary, the platform has added more movies, shows, original programs, premium network add-ons and now live TV.

“Our lives as viewers have been changed irreversibly,” said Ben Smith, Hulu’s svp and head of experience. “Hulu was radical when it launched, but we’ve been all about putting the user in control of the time and place they watch content they love since the beginning.”

When Hulu considers what to develop or provide, it always considers the viewer first and tries to find a way to make that experience friendly to both users and advertisers, according to Smith.

Personalization and questioning what TV will be is at the top of Hulu’s agenda as it looks forward to the next decade.

“We don’t sell ads into shows, but we sell audiences to advertisers,” Smith said. “If Ford wants to reach a male audience aged 25 to 35 in the Midwest, we can do that. And if you don’t fall into that category, then you won’t see that ad.”

In addition to contextually appropriate ads tailored to the audience, Hulu is also mindful of ad repetition (“Zero people want to see the same ad five times in one hour,” Smith said) and providing viewers with the option not to see ads. Hulu offers commercial-free streaming options subscribers can add onto the company’s live-TV plan or its streaming library plan.

“Consumers are expecting experiences that are tailored to their needs,” Smith said. “Hulu, Spotify, Amazon—all these companies are working to empower the consumer.”

Source: adweek.com; 20 Nov 2017

Netflix Could Become Industry’s Biggest Spender On Content In 2018

Netflix says it may spend as much as $8 billion on content in 2018 — a figure that could make it the biggest content buyer of any media or technology company.

The company slipped the figure into its quarterly letter to shareholders Monday evening, adding that it had $17 billion in content commitments over the next few years, and is expected to spend between $7 billion and $8 billion on content in 2018.

For comparison, the $8 billion figure would be nearly twice what broadcast networks like NBC and CBS spend on content, according to data from SNL Kagan and Boston Consulting Group.

The only other company to spend more on content than Netflix until now has been ESPN, which totalled an estimated $7.3 billion in 2016, largely due to expensive live sports rights.

If ESPN’s spend is similar to what it was in 2016, Netflix could be poised to surpass the Disney-owned cable sports giant. Of course, sports rights tend to rise in price over time, thanks to contracts that were signed years ago, before the cable bundle began to fray. So ESPN’s spot atop the content world may yet be secure.

Netflix’s rapidly growing content spend adds to its competitive challenge for ad-supported media. The more cash it spends on content, the more eyeballs Netflix can steal from other sources of video, including many ad-supported companies.

Source: mediapost.com; 17 Oct 2017