On April 12th, Bob Iger, CEO of Disney, unveiled the long awaited plans for Disney Plus, a streaming service that would be competing directly with Netflix. Media reports consistently mentioned that a collective gasp went up in the audience when Iger announced that the new Disney entry would cost a subscriber $6.99 per month or $69.99 for a complete year. Clearly, it was priced very attractively for all kinds of households and well below what all of us are paying for Netflix.
The Disney franchise is a strong one going back to 1937’s “Snow White and The Seven Dwarfs.” Today, they have the current Disney studios, legacy films, the Fox film library and great franchises such as Pixar, Marvel, and Star Wars. This weekend their new “Avengers” entry garnered well over a billion dollars at the box office. Disney Plus, according to Iger, will also be the exclusive venue for 30 years of “The Simpsons.” So, to put it mildly, Disney is the king of content in the media world. Disney projects 90 million subscribers to Disney Plus by 2024. Many media analysts put it somewhat lower at 50-60 million but one generally expects bullishness at the time of a major announcement.
A lot of people are stopping here which strikes me as a big mistake. Let me be clear. I have great admiration for Bob Iger. He is not just the greatest media executive today but one of the greatest leaders, in my opinion, across all industries both domestic and international. He is very shrewd and saw how the media world was evolving. Iger knew that he had to do something as commercial avoidance continued to advance and Netflix and other video alternatives gobbled up more and more viewing time with direct to consumer plans.
To me, too many observers are focusing solely on the video content. Disney has to transform itself from a largely legacy or conventional provider to a strong streaming entity. To me, they can do that. They have many talented people on board and have the hammer of abundant content to execute it. Many say that Iger has delayed his retirement for a few years to oversee the transition.
Looking across the world, it is clear that Netflix has won the streaming battle with 160 million + subscribers in countless countries (despite this, they are not a big moneymaker). So, Disney, even under the best case scenario is not going to unseat Netflix overnight or even in several years. Disney faces a big or huge challenge that few people are mentioning but I feel is key to the Disney Plus and even their corporate future. As mentioned, Disney has lots of content and nobody does it better. The edge to me that Netflix has is not with their subscriber base but with their amazing lead in Artificial Intelligence (AI). Look closely at Netflix. Their logarithm is not good—it is amazing. When in college, some friends and I ran the film society on campus. We became devotees of classic films. Over the years, I have reviewed over 3,000 films for Netflix. Using my preferences, they have NEVER recommended a film that I did not like. Not once.
They can create original programming by looking at their viewer profiles and tastes and putting together shows that might not have huge broad appeal but build loyalty among a fair sized number of aficionados. Some reports claim that they have users divided in to over 1,000 buckets and tailor programs to them.
This to me is the big hurdle that Disney will face as they launch Disney Plus on November 12th. They can produce content—some good, some great. They have deeper pockets than Netflix and can lose money on their Plus entry for quite a while. What they need to do as they transform their company is get up to speed and quickly on AI. That is the issue that will be key going forward on whom will be standing profitably years from now in the video world.
Very soon, I will put up a post regarding Netflix vs. Disney vs. Apple. Watch for it!
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog
Monday, April 29, 2019
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