Disney enters the online streaming wars: can it thrive in an ever saturated marketplace?

The prevalence of subscription-based content in today’s media landscape has been flared up with renewed intensity this year.

The US media marketplace has recently overseen the emergence of several new online entertainment services which are seeking to dislodge the more established players, Netflix and Amazon Prime.

With the upheaval currently taking place in the market, exciting new opportunities are springing up for content providers or ambassadors to vie for the attention of global audiences via subscription services.

This was underlined as recently as last weekend, when Hasbro, America’s biggest toymaker, made an aggressive foray into the market for subscription streaming, by acquiring Peppa Pig owner Entertainment One in a deal worth $4bn, in an effort to convert toy brands into original television and film content.

In like manner, WarnerMedia announced its forthcoming OTT streaming platform, HBO Max, which will feature content from Warner Bros’ diverse catalogue of film and TV. Meanwhile, Apple has invested as much as $6bn this week on new TV content ahead of the launch of its new Apple+ online service.

In the UK, the launch of the American sports subscription digital platform The Athletic — which operates with an ad-free service — has posed an existential challenge to the some of the more traditional players, notably The Guardian, the BBC, and The Observer, and more broadly has thrown the model of the ad-free readership experience into disrepute.

It is against this backdrop that Disney, the world’s largest media conglomerate, has rolled out plans for its own subscription-based video streaming service, Disney+, which will bundle together its own Disney platform alongside Hulu and ESPN+.

Disney+ will be available in the US, Canada, Australia, the Netherlands and New Zealand from November, for $12.99 per month.

The desire to become the preeminent force in online streaming is said to have inspired Disney’s acquisition of 21st Century Fox entertainment assets in March, as well as National Geographic, by creating a steady stream of both new and legacy programming.

James Dean at The Times suggests that Disney is hoping to secure between 60 million and 90 million paying subscribers within 4 years. For context, Netflix, the market leader valued at $155 billion, boasts around 140 million subscribers.

 

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To do so, Disney will have to overcome forecasts of an eventual tipping point for consumers, in which the market becomes so cluttered that companies see subscription rates drop off.

There is doubt among many observers over the long-term viability of an online eco-system in which several players compete with their own paid subscription models. Between Netflix, Amazon Prime, HBO Apple, Comcast, Britbox (the BBC and ITV joint venture) and now Disney, it is simply too heavy a burden on an average household’s monthly expenditure. Similarly, the cluttered nature of the music and audio content market which includes the likes of Spotify, YouTube and Apple Music, merely adds to this strain.

However, from a consumer perspective the bundle of Disney, Hulu and ESPN+, which will blend film, TV and sport into a single product, could prove particularly enticing. The scale of its franchises and properties, such as Disney, Star Wars, Marvel, Pixar, 21st Century Fox, Hulu’s TV programming, National Geographic — is so extensive and appealing that it could certainly draw consumers en masse to its platform.

Moreover, the success that ESPN+ in having garnered over 2 million subscribers within its first few months of operation by securing lucrative rights to UFC and Formula 1, MLB, NHL, MLS — supported by the leading OTT technology company BAMTech — underlines Disney’s potential to dominate the sports broadcasting space. It is not inconceivable that given its immense scale and financial artillery, Disney+ could in the not-too-distant future compete with the likes of Sky, BT and DAZN for more major sporting rights, which are increasingly becoming part of the broader entertainment packages and the race to secure market share in the OTT environment.

 

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The fragmentation of the online streaming service space is becoming increasingly unsustainable for companies and consumers alike, and will only continue to fuel the rates of illicit streaming and subscription fatigue. The need for a single streaming platform in which the broadest possible offering of content can be accessed has never been greater.

Disney’s efforts to undercut Netflix and emerge victorious from this new world order appear the most compelling of any recent entrant so far to the market and could truly redefine how film, TV, and sport is consumed.

Although the introduction of Disney+ feels like an exciting overture from Robert Iger and co, It is certainly a gamble.

The reality is that Disney are minnows in terms of size and market capitalisation in relation to Apple and Amazon and will have to reach beyond their means to create a product compelling enough to secure a commanding position in the subscription streaming market.

It is significant also that Netflix and The Athletic have hitherto managed to retain such dominant rates of subscribers by offering much lower prices and more niche content, which has proven more alluring than expensive bundled offers.

This consumer feels that the subscription streaming market getting too claustrophobic and pricing will eventually decide the fate of Disney+, or any other entrant into the online media landscape.

Disney must continue to build on its portfolio of film and entertainment properties, as well as its sporting rights, in order to create a product that will truly stand out from its many competitors.

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