How Disney+ Could Raise the Stakes in the Streaming Wars

Thursday's four-hour presentation may have catapulted Disney well ahead of Apple and set a high bar for WarnerMedia and Comcast.
Disney

Stage 2 on the Disney lot in Burbank is steeped in the past. Mary Poppins, Dragnet and Pirates of the Caribbean have all filmed there. But on Thursday, April 11, Disney transformed the space into a venue for CEO Bob Iger to share his vision for the future. 

During a nearly four-hour presentation, Iger unfurled his plan for soon-to-launch video platform Disney+, the media behemoth's answer to the decline in cable subscribers and the rise of streaming. But while the means of distribution may be changing, Disney plans to sell the service by highlighting its 96-year programming track record. 

"We're starting from a position of strength, confidence and unbridled optimism," Iger boasted to the room of investors and press after they finished watching a lengthy video that showed off the breadth of Disney's content library, including new additions from its recent 21st Century Fox acquisition. 

Iger and Disney direct-to-consumer chairman Kevin Mayer are keenly aware that Disney+, which will launch in the U.S. on Nov. 12, is entering a crowded streaming market, one where Netflix and Amazon have a significant head start and incumbents Apple, WarnerMedia and NBCUniversal soon will be jockeying for a position. It's clear they believe that the Disney brand will be their secret weapon as the fight for subscribers escalates. 

Disney content from Marvel, Lucasfilm, Pixar and new additions 21st Century Fox and National Geographic were center stage at the Disney+ unveiling, in which programming exec Agnes Chu highlighted plans to offer more than 7,500 episodes of television and 500-plus new and library film titles. As if that deep bench weren't enough, new and original content from each of those units will be included in the service. What's more, the price — $6.99 per month or $69.99 for the year — is $2 less than Netflix's most basic plan.

The price point immediately turned heads in agency circles, with one anticipating Disney+ will have subscribers in the eight-figure range right off the bat. (Disney, for its part, expects to have 60 million-90 million global subscribers by 2024.) Another, meanwhile, expects Disney+ will eventually hike the monthly fee: "Disney is doing it so families can afford it but it will grow, price-wise." 

Disney's presentation — which also included news that Disney+ would be the exclusive subscription video home for The Simpsons, acquired through the Fox deal — came two and a half weeks after Apple's star-studded Hollywood unveiling failed to turn heads. J.J. Abrams, Jennifer Aniston and Oprah Winfrey were among those who took the Cupertino stage to tout Apple originals, but the star power couldn't mask the fact that video heads Zack Van Amburg and Jamie Erlicht didn't share a price point or specific launch date, among other details. (Apple typically holds a September product event in which it could do that two months ahead of the Disney+ debut.) 

"One is about trying to get the biggest names. The other is about the brand," said one top TV lit agent in describing how the tech giant's entry into the originals race differed from Disney's unveiling. 

Ultimately, it may be unfair to compare Apple to Disney+. For Apple, originals will serve as a value add to entice subscribers to pay for its services. Meanwhile, Disney's goal to become a dominant force in streaming was clear the minute Iger announced in August 2017 that the company would pull its movies from Netflix and launch its own direct-to-consumer platform.

"Everybody has an emotional connection to the things Disney is presenting and everyone had some visceral reaction — 'Oh, Star Wars! Oh, Lady and the Tramp!' — but Apple has to build brand equity with their programming, which they haven't done. And nobody knows what to expect," another lit agent with programming on both services notes.

What Disney was able to do on Thursday that Apple couldn't was show the sheer size of its commitment to going over-the-top. Every facet of the company is putting its muscle behind the launch, producing projects for the service and planning a marketing campaign that spans major events like D23. The company currently projects that by 2024 it will spend a combined $4 billion to both develop original programming and license content. Disney's ability to compete, notes GroupM business intelligence president Brian Wieser, is "just a function of how much they're willing to spend on content." 

And while Netflix may already outspend Disney — the former invest upward of $8 billion annually on originals — Disney+ already has a distinct advantage between the two: a deep roster of beloved franchises. Netflix has struggled with launching definitive brands — its Marvel experiment was a bust and only further soured its relationship with Disney. Netflix is now looking to former Disney-based creators Shonda Rhimes (Grey's Anatomy) and Kenya Barris as well as longtime Fox super-producer Ryan Murphy (Glee) to create brands that can rival Disney behemoths like Star Wars and Marvel. (In the latest example of the two companies' battle for talent, Disney on Wednesday signed an overall deal with the team behind Netflix's Chef's Table. Hours later, Netflix would announce yet another unscripted show from the same producers.)

Looking ahead, the Disney+ event will serve as a roadmap for WarnerMedia and Comcast as they look to unveil streaming services of their own within the next year. Like Disney, WarnerMedia will harness the power of its content brands, including HBO, Turner's TNT and TBS and content from Warner Bros. Pictures (Harry Potter) and Warner Bros. TV (Friends). While Disney made it clear that it will keep assets like Star Wars and Marvel exclusively, WarnerMedia has yet to indicate if it will also turn its back on millions of dollars in licensing fees. (It's worth noting that with Disney+ as the exclusive SVOD home for The Simpsons, Disney chose to forego millions — possibly billions — of dollars in revenue it could have made selling the massive 660-episode library to a competitor.) Comcast, meanwhile, faces a similar decision with assets like The Office

As Iger said at the top of the presentation, this is "where we're going." Soon the company will find out if is competitors will follow.