Disney recently announced details on their upcoming βDisney+β direct-to-consumer streaming service at their Investors Day β big news for everyone in the tech and media scene since Disney is one of very few content companies with enough leverage purely from differentiated content to make a strong competing tech play against Netflix, Amazon, and others.
Most others in the traditional media space have no chance of competing on a tech level with the likes of Netflix or YouTube, but Disney has enough of its own unique IP to create their own garden and draw away enough attention to be interesting. Between Disney Animation, Pixar, Marvel, ESPN, LucasFilm, and others, thatβs a moat of pure creative content property that could give them enough breathing room to catch up on the technical side to build a direct-to-customer business around.
This piece from Stratechery covers down on whatβs interesting here if Disney actually does play the long game. The shift from affiliate fees and traditional distribution will mean foregoing near-term revenue from cable carriers and other licensees in service of building a growing base of direct relationships with consumers, akin to the machine Netflix has built. But a key difference is how Disney+ fits into the overall Disney machine:
This is the only appropriate context in which to think about Disney+. While obviously Disney+ will compete with Netflix for consumer attention, the goals of the two services are very different: for Netflix, streaming is its entire business, the sole driver of revenue and profit. Disney, meanwhile, obviously plans for Disney+ to be profitable β the company projects that the service will achieve profitability in 2024, and that includes transfer payments to Disneyβs studios β but the larger project is Disney itself.
By controlling distribution of its content and going direct-to-consumer, Disney can deepen its already strong connections with customers in a way that benefits all parts of the business: movies can beget original content on Disney+ which begets new attractions at theme parks which begets merchandising opportunities which begets new movies, all building on each other like a cinematic universe in real life. Indeed, it is a testament to just how lucrative the traditional TV model is that it took so long for Disney to shift to this approach: it is a far better fit for their business in the long run than simply spreading content around to the highest bidder.
