Disney+ Originals, Pricing Strategy Puts Pressure on New Streamers, Study Finds

Disney

“Disney+ is really going full in,” says Fred Black, an author of the Ampere study. “It has the strong catalog and it was likely to sign up a lot of new subscribers without having to offer much in the way of originals."

Disney is “throwing down the gauntlet” to would-be SVOD players by bankrolling a huge number of new original series for its upcoming Disney+ service and by pricing the service below Netflix, a new study by Ampere Analysis finds.

The U.K.-based group looked at the content strategies of six upcoming SVOD services, including Disney+, Apple TV+, WarnerMedia's HBO Max, Viacom’s BET+, NBCU’s Peacock and Jeffrey Katzenberg's shortform startup Quibi. (The study was released before NBCU unveiled the name and details of its streaming service.)

Despite having a large and attractive back catalog and strong brand recognition, Disney+ is apparently taking no chances and has commissioned 61 original series and titles for its SVOD service, which will launch in the U.S. and multiple international territories in November. That makes Disney+ the largest player “by some margin” among new SVOD entrants, Ampere points out. Apple, by contrast, has ordered “just” 36 new originals for its Apple TV+ service, the study notes. The mobile-only Quibi platform has announced a total of 47 original series but, given the nature of the service, these are much shorter, with a length of approximately 10 minutes per episode.

“Disney+ is really going full in,” says Fred Black, an author of the Ampere study. “It has the strong catalog and it was likely to sign up a lot of new subscribers without having to offer much in the way of originals. Given its dominant position, this level of investment from Disney is quite surprising.”

Disney's decision to price its new SVOD service below Netflix at just $7 per month — and Apple's underbidding of Disney, with Apple TV+ set to launch Nov. 1 in the U.S. for $5 per month for a family subscription — puts further pressure on new services, Black says.

“There will be a lot of price pressure for new entrants and it will be very difficult for any player to survive if they don't have the backing of a major studio to soak up early losses,” he notes.

Both WarnerMedia's HBO Max and NBCU's Peacock service — the later of which unveiled its originals lineup Tuesday — have commissioned more than a dozen new originals but, like Disney, are also counting on their deep catalogs to attract subscribers. HBO Max on Tuesday, after the study was released, announced a record-setting five-year deal to secure exclusive domestic streaming rights to Warner Bros. Television's The Big Bang Theory (it previously paid $425 million over five years to move another WBTV hit, Friends, over from Netflix).

The bulk of commissions for the new SVOD services are drama series, many of them in well-worn genres. Ampere found more than one quarter (27 percent) of scripted commissions across the six new services were sci-fi and fantasy series, followed by crime and thriller shows (21 percent). NBCU's Peacock has commissioned a reboot of Battlestar Galactica from Mr. Robot creator Sam Esmail and a Brave New World adaptation starring Alden Ehrenreich, as well as crime series including Dr. Death starring Jamie Dornan, Alec Baldwin and Christian Slater and the mystery thriller One of Us Is Lying.

The upcoming Apple TV+ slate includes the space dramas For All Mankind and Foundation, while HBO Max is entering the fantasy field with Gremlins spinoff Secrets of the Mogwai and the sci-fi genre with Alissa Nutting’s Made for Love.

“These genres have proved particularly successful for Netflix and Amazon,” says Black. “The new competitors are looking at that and trying to replicate it.”

The bulk — some 66 percent — of original commissions so far announced for Disney+ originate from existing source material, much of it spinoffs from the studio's film franchises, including Marvel superhero titles Loki and The Falcon and the Winter Soldier and the Toy Story-inspired Lamp Life. By comparison, some 47 percent of Apple TV+ commissions are original concepts, as are 43 percent of the new shows ordered for HBO Max.

Black sees a sharp contrast in the strategy of the non-studio players when it comes to their SVOD offerings. Apple, he notes, is taking an approach similar to Amazon with its Amazon Prime service, using original content as a loss leader.

“Apple can afford to make a loss on content just to fuel people purchasing their hardware, to get more people to buy iPads and iPhones,” he notes.

Quibi, Katzenberg's big push into shortform content, is “a real wild card,” Black says, “there's nothing like it on the market at the moment so it is hard to say how it will do.” Black sees Quibi placed somewhere in-between long-form subscriber-based services Netflix and Amazon Prime and advertising-supported social media and online sites where audiences currently consume the bulk of short-form content, including YouTube, Snapchat and Facebook Watch.

Aside from first-starter advantage, both Netflix and Amazon Prime also have a big lead over the new SVOD entrants when it comes to the internationalization of their content. Netflix has roughly a 50-50 split between U.S. and international original series and Amazon's originals slate is close to 60-40 U.S.-to-international. Of the upcoming streaming services, none have more than 10 non-U.S. commissions and “all are very Anglo-centric,” says Black.

Apple TV+ has commissioned Calls, an U.S.-France effort based on the French drama series of the same name, which the company will co-produce with French network Canal+, and Peacock has announced a pair of Hispanic originals from its Spanish-language network Telemundo, including the dramedy Armas de Mujer and a new series from the makers of the hit crime telenovela La Reina del Sur.

“As these services go global, international series will be key in helping to drive subscriptions,” Black says.

A previous version of this story misspelled the first name of Fred Black.