“Things Will Look Better in the Morning” – Bagheera, The Jungle Book
With the rise of digital media, for most consumers, the days of buying DVDs and CDs is in the past. Digitization of the distribution of media content to consumers has been redefined by over the top services (“OTTs”), most notably, Netflix, boasts a 64% OTT market share, a user base of 120 million and accounting for 35% of peak period downstream traffic in the US.  Traditional media content producers have been forced to adapt the way in which they supply their end customers with content. Facing the new reality of either partnering with the 800-pound gorilla, Netflix, or creating exclusive platforms in order to compete. In 2012, Disney entered into an agreement with Netflix to bring all of the studio’s films exclusively to Netflix, including Disney’s live-action films and Pixar’s franchises.  The new partnership served as a reliable cash stream for Disney, bringing in, by Analyst estimates, approximately $325 million for the right to stream its content. 
“Sometimes the Right Path is Not the Easiest One” – Grandmother Willow, Pocahontas
Despite having partnered with Netflix to stream its content through their services, Disney experimented with different proprietary OTT offerings, including internally developing an application called DisneyLife. The app was released in November 2015 on a limited basis in the UK, offering old Disney movies and TV series. The proprietary offering was largely a failure and was never released outside of the UK. 
In June, 2017, Disney’s BoD assembled in Walt Disney World to discuss the ways in which technology was disrupting the company’s business lines and how it was going to respond. The most alarming takeaway from this summit was that cord cutting was occurring at a much faster rate than anticipated, with live streaming for youth programming massively under-performing, while Netflix experienced rapid growth. 
In August 2017, Disney made the decision to double down on its streaming efforts, announcing that it would be acquiring a 75% stake in BAMTech, the streaming-video company created by MLB, for a total investment of around $2.6 billion. In addition, Disney introduced two new subscription streaming services, both built by BamTech – one focused on sports programming to be offered through the ESPN app (Spring 2018 launch) and another featuring movies and television shows (2019 launch).  In addition to the decision to launch its own subscription streaming services, Disney announced that it is developing a series of original television shows to be released through its application.
Given that Disney has historically utilized a paid subscription model through its cable provider partnerships, it would seem that the leap for consumers paying for a discrete offering could be reduced compared to other content providers. Disney has experimented with this approach for ESPN, which has experienced considerable pressure in user subscriptions, falling from 99 million subscribers in 2013 to 90 million subscribers in 2016.  Disney offered consumers the ability to subscribe to “skinny bundles” of ESPN channels priced at $40-50 per month, which, while early, has been well-received by consumers. Further, as Disney thought about ways in which to reach a younger audience, it established a partnership with Snapchat in 2015 to create temporary video stories. 
“Reach for the Sky” – Woody, Toy Story
While I think that Disney has taken positive steps toward reducing its vulnerability to the cord cutting trend, I am concerned about its ability to create relevant content to compete with the power houses, including Netflix, Amazon, Hulu, HBO etc. I would suggest either 1) acquiring or partnering with a popular OTT in order to bundle the offerings, 2) continuing to increase relevance by continuing to acquire studios similar to the Marvel and Lucas Film acquisitions or 3) go all in on original television content to establish shows with considerable buzz as a number of competitors have done successfully.
“If You Can Dream It, You Can Do It” – Walt Disney
- Should Disney pursue a model of becoming a scaled content owner with intellectual property exclusive to the platform to its own platform (a la Game of Thrones / HBO or Stranger Things / Netflix)? What are the pros and cons?
- In 2015, the rumor mill was active with suspicion that Disney would acquire Netflix. How do you view the pros and cons of growing an OTT platform organically vs. through acquisition? What would you have done?
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 Koblin, Brooks. 2017. “Disney’S Big Bet On Streaming Relies On Little-Known Tech Company”. Nytimes.Com. https://www.nytimes.com/2017/10/08/business/media/bamtech-disney-streaming.html. [Accessed 15 Nov. 2017].
 Facts, Netflix. 2017. “Topic: Netflix”. Www.Statista.Com. https://www.statista.com/topics/842/netflix. [Accessed 15 Nov. 2017].
 Disney’S Streaming Service Has Won, And It Hasn’T Even Launched Yet”. 2017. The Verge. https://www.theverge.com/2017/11/11/16637732/disney-star-wars-marvel-pixar-streaming-service-netflix. [Accessed 15 Nov. 2017].
 Why Disney Still Believes ESPN Is On A Winning Path – Market Realist”. 2017. Marketrealist.Com. http://marketrealist.com/2017/05/why-disney-still-believes-espn-is-on-a-winning-path/. [Accessed 15 Nov. 2017].
 ESPN Launches A New Version Of ‘Sportscenter’ To Snapchat”. 2017. Fortune. http://fortune.com/2017/11/13/espn-sportscenter-snapchat/?iid=recirc_f500profile-zone1. [Accessed 15 Nov. 2017].