Disney’s Choice
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On one hand, yeah, its targeted at kids. They probably aren't savvy at online content discovery. They almost certainly aren't subscribed to the Disney XD Youtube channel when there are Spiderman vs Pregnant Elsa videos to watch.
On the other hand, they put it out for free, to anyone in the US with an Internet connection, and they got 1.6m hits.
I don't think horizontal works as a business strategy. It relies entirely on memetic effects to propagate your content because the advertising budget required to reach an entire demographic to get ubiquity is magnitudes larger than the cost of actually making the thing. There is too much content inundating people - especially children. It makes your success completely random. Did your "meme" scenes go viral? Did your intricately designed quotable character take off? Did you have those, and just get overshadowed by some other meme at the time?
We won't see the consequences for a while. It will be 10 years before the cablecutters who dropped Disney have children at a critical enough mass to dramatically limit the number of young faces in front of non-interactive screens. But when that comes, it will have consequences none of these companies traditionally built on tv viewership are ready for. And I don't even know if they can prepare.
I feel like the only real end-game solution is to cultivate a fanbase, and use them as your revenue stream - much like how music has become today. Artists don't make anything off trying to sell their music anymore, because not being on spotify and pandora is a death sentence to your relevance. You need the audience, even if they aren't paying you anything, to attract fans that want mech you can profit from.
It would be really weird to see Ducktales as a Patreon project that is getting paid by 100k supporters several millions a month, but it seems to me that is the endgame for original creative media in the long run.
Netflix capitalizes on this a little bit as well, with using viewing trend data to determine what shows to fund next. But I was bearish on Netflix for a long time; to acquire content they have to pay recurring fees to the original producers, which means annual expenses increase as content increases, but ARR only increases when customers increase. Eventually... everyone has Netflix. How do they increase their content library then?
One way is contract value depreciation of the content over time, which happens. Another is selling addon packages; the "cable industry" route. But the real answer is: Original content. In other words, growing the vertical integration of their platform.
And now we see Google really quadrupling-down on efforts which sound more vertical than horizontal; cloud platform and g-suite.
I think there's something here.
Or even more critically, everyone has seen everything they want to see on Netflix, and Netflix itself cannot produce enough original content fast enough to justify the sub. Especially when they are competing with what is often free and immediately accessible.
I don't have a Netflix sub right now because nothing they make is compelling enough to pay the $10. Sometimes they release a show I want to see, so I sub for a month, watch that, and unsub again. For like a year. But we are only getting more content online over time, not less, and I'm finding way less need to seek out something to waste time watching, especially if I have to pay up front for it.
The issue is discovery - not the amount of stuff.
People lean towards looking for well known stuff on Netflix - that's a mistake.
It's actually much more interesting to discover the gems you wouldn't normally discover, by watching a little bit of what seems like it may be interesting.
The Hollywood model had me in their shackles where I did the exact same thing you described - I'd subscribe for a show/movie I knew I'd want to watch, search for a few well known movies to re-watch and then give up when they weren't there.
The really good stuff is discovering stuff that doesn't have A list celebrities - it's more original (in the good sense of the word) and now that I've put in the little bit of work of trying out shows I have no idea about, it's paid off.
The really good stuff on Netflix that I've really liked: Flaked, Peaky Blinders, Hell on wheels
Hell on wheels gets no credit anywhere and it's an incredible show, there are many others like it.
Also, sub/unsub is not new. Everyone did the same with HBO and they did just fine.
Imagine this simplistic model of Netflix's finances: they pay ABC $1M/year for ShowA. They have 100k customers in year 1 @ $10/mo, so (ignoring operational overhead) they can afford the show.
Year 2, Netflix wants to continue paying for ShowA because they want to grow their catalogue. Let's say the price has dropped to $800k because many shows lose value over time. Netflix adds ShowB for $1M, meaning they are paying ABC $1.8M. They now have to add 80k customers to be able to afford the new show + the old show.
Point being: This is highly simplified, but the rate at which they can add content is bounded, in one way, by the rate at which they add customers. In other words, if they aren't growing their subscriber base, the existing subscribers are just paying for a catalogue of content they've already watched, or Netflix has to start expiring old content in favor of using that revenue on new content. The second path is obviously the better one.
This is a fundamental thing in services like this, which is why no single service will ever be a "complete repository" of every piece of content in the world. Individual services can only be complete repositories of content that the company which manages it owns. Which is exactly why I'm bullish on Disney's new service; Disney has the most powerful content library out there, between all of their properties. This service will do extremely well, likely better than Netflix.
What difficulty exactly would they have to produce "original content fast enough"?
Content is produced by independent teams. It's not like one show is holding others back.
Personally I expect that after a period of everyone trying to run their own service, quite a lot of them are going to fail and discover that letting Netflix have its competitive advantage in streaming while you focus on content production may not be such a bad idea. Or there may be several aggregators and an industry-standardized way of shipping their older content out to them all at once. (This has the advantage of keeping any one of them from getting too powerful.) Perhaps some of that competition will come from specific companies realizing they can improve their own offering by letting other companies on board and then... oh... you've built a Netflix competitor, rather than a Disney platform. Go$h, how $hall we deal with failing with such $ucce$$?
I'd still like to peer in on a parallel universe where Netflix had a subscription model but also sells/rents additional premium content. Not because it would necessarily solve all problems, I'd just like to see the differences when the dominant player makes such a fundamental change. Eventually they'd still try to use their position to extract more rent than the content producers would tolerate, but the resulting changes in timing and value proposition would still have interesting effects.
Basically they put up an Ad for a eagerly awaited product with a really large fan base (a generation of parents wanting to give their kids the nostalgia they have)
Really they should be paying Youtube?
The concept of the first in a series is free is a common business concept for many products (like collectors cards, heroin, first month free memberships). It's an old concept except digital.
This is more or less what Disney is doing by putting Ducktales on YouTube for free.
What is even happening anymore?
Netflix has been forced to create it's own content because old media wants to charge Reed an arm and a leg for anything distributed online that they don't have control over. Old media always raises the asking price for anyone who comes to them requesting to redistribute content. They are scared to alienate the cable providers, the advertisers, and of losing even more control of distribution with these new consumer-centric on-demand business models. This is why despite years of hype, Google and Apple haven't gotten far with their TV bundles so far.
I do think the Netflix - Disney love/hate is over-hyped. Both can exist. Disney can keep crafting great stories and Netflix can keep targeting customer groups across the globe with affordable content that scratches their niche itch. Amazon has been more willing to pay the piper, but has also had to resort to in-house content. The great thing about good TV/movie content is it tends to retain value. Good luck to Disney creating as seamless a distribution platform as Netflix though...
I think Viacom is going to be the real loser here, to YouTube and Netflix. Most of their MTV, Comedy Central stuff has no replay value. Music videos in particular have been completely absorbed by YouTube. Meanwhile Netflix is doing great comedy specials. Years of family in-fighting has only further weakened Viacom's position and they are likely to be forced into tiered packaging deals by even their traditional cable and satellite partners.
This would totally be worth $10/month to have access to the entire Disney catalog; the entire "Disney Vault", all the content from the 60s, 70s, and 80s; all the Wonderful World of Disney; all the classic Disney movies (the entire catalogs of the likes of Fred MacMurray, Annette Funicello, Tommy Kirk, Keenan Wynn and other contract Disney actors from those eras; movies like The Black Hole, Apple Dumpling Gang, The North Avenue Irregulars and other stuff that, if it's available at all, is only currently findable used on VHS); all the animated Disney movies; all the Mickey Mouse and Donald Duck shorts; all the Mickey Mouse Club episodes, all the tween-centric episodic shows, etc.
This would potentially be worth more than $10/month.
If it's just going to be the popular animated feature-length movies, it's not worth $10/month. And they could still screw this up by not having the entire animated movie catalog available for random streaming, but rather only a subset available at any given time.
Disney has a truly massive archive of quality, family content, much of which hasn't been seen for decades and few people even know about or remember. It would be a shame if it continues to rot in obscurity in their vault.
It's in competition with what is just a shitload of stuff now (all of Disney, all of Pixar, all of Star Wars, all of Marvel), and it's still holding its own in the park pretty well for a thing that never existed. It's not dominant, since nothing can really be dominant in a line up like that, but it's definitely there.
That was in the 90's, so before the Pixar, Star Wars, and Marvel stuff got pulled into the fold. It's good to see that there are still some characters floating around that kids have no reference for.
That artificial scarcity that Disney practices with physical media won't work with an on-demand service and if they try it will definitely be what kills the service.
It works with physical media because once you own it you can watch it as much as you like. So when they do offer the media, people jump and pay full price for it because they know it's their only chance for a while.
With on-demand people aren't going to stick around in the hopes that a movie they want comes into rotation.
$10/month would be worth it for me but it's probably not realistic. A single movie usually costs more than that. With this plan they'd cannibalize their own media market.
Another way of being 'realistic' (not moral) is to see that 1TB hard drive is 100 bucks and can contain a thousands of Disney movies, which can be obtained fairly easily online.
They can't charge too much for something that people essentially buy out of good will rather than necessity.
I remember doing that but I thought it was because we only went to the video rental store once a week.
This article already fails by virtue of going "whu, no Marvel, how do the build a proposition here?" We already flaming know.
Not saying it's the better option, but a lot of folks forget that it is an option.
Source: I work at BAMTech.
I don't understand why everyone is talking about this like it's a potential idea. This service exists today - Disney Life. It's about $7 a month.
Going off on their own without being part of a larger more diverse set of content could deal a serious blow to Disney. I for one would not ever pay Disney through a Disney-specific service just for streaming Disney content, as much as I like Disney movies.
Disney also owns Marvel, which brings all Marvel content.
Disney also owns Star Wars now, too.
Disney also owns ABC and ESPN.
One of the major complaints with all of these streaming companies is "no sports" -- imagine if Disney leveraged their sports library and technology to bring live streams to their library? How about old classic games? Best Of series?
It seems like Disney is actually in a FANTASTIC position to provide entertainment for every single person in the family.
Maybe I'm weird, but I get my fix of Disney IP's by purchasing a Blu-Ray once or twice a year - I can't stand the garbage Disney puts on their cable channels (seriously, to hell with the Disney Channel and Disney Jr.), their classic movie library I won't let my daughter near, I couldn't care less about anything on ESPN and ABC. That basically leaves Pixar, Star Wars, (sometimes) Marvel and on (rare) occasion their newer films and licensed content. Why on earth would I pay $5-10/mo ($60-120/yr) when I can spend $20-40/yr on a disc or two?
'At the same time, Disney might not even include all of its own content in the service. Iger said of Marvel and Star Wars, “We’ve also thought about including Marvel and Star Wars as part of the Disney-branded service, but there where we want to be mindful of the Star Wars fan and the Marvel fan and to what extent those fans are either overlapped with Disney fans or they’re completely basically separate or incremental to Disney fans.”'
If the only way I could stream new Marvel movies would be to go to Disney directly, I might pay per movie, or if it were cheap enough, I'd pay $7 for a single month of service to get that new movie or watch the original Tron re-engineered to look incredible in 8K one day when I'm 80 years old and have an old 8K monitor. But, I feel safe in my decision not to pay for a streaming service of only Disney content; I'm not a Zac Efron fan, though I did think Radio Rebel was Debbie Ryan's best movie.
People are getting antennas but a large reason is that most cable and network providers switched to digital only and turned off analog in the last year or two. Digital antennas are quite nice for live not avail on streaming or something like Vue.
I cut the cord in 2015 for a Vue/antenna/Hulu/Netflix alternative and Cox cable in Arizona turned off analog in 2016[1] in my area on the default wire so a digital antenna was needed. The cord cutter movement pared with providers turning off analog, and cord cutters missing live/local channels on services like Vue/Sling etc spiked the sales in antennas. Haven't used an antenna in ages and digital antennas are actually quite nice, full HD or no channel, tv static snow is dead.
[1] http://www.azcentral.com/story/money/business/consumers/2016...
Pulling those—or their followup seasons—over to the Disney streaming service would have to hurt Netflix.
Please Disney, be greedy here, I know you can and I know you want to :)
$10/mo for 40+ year old TV shows and obscure films that only people over 70 would be aware of.
https://stratechery.com/2013/steve-jobs-on-television/
Seems like Netflix is slowly chiseling a way at the TV go-to-market strategy. Also seems like there is still a lot of resistance to the single-integrated-UI problem. Still lots of paradigms, apps, and devices competing to be the accepted way to find and watch video on your big living room screen.
I even doubt you'd be able to regulate it well. It would mean forbidding Netflix Originals, for example. Netflix would just start a legally independent production company called Fletnix and get global exclusive licenses on all content it produces.
Remember when Sony Electronics tried to play the game Sony content companies wanted it to?
Yeah, that worked out just fine. NOT
My last straw was buying a Blu-ray player that claimed glorious high quality video and lots of apps/software/content: with anticipation I had it play the included trailer for then-coming-soon movie "Salt", expecting the very best of my then-new 1080p system ... and was dismayed by a horribly grainy 320x240 video. Sony Electronics didn't give a ---- about content, even though the whole point of buying the products was experiencing content.
Unless they offer their content for a fraction of Netflix subscription (which I doubt), I'm not up for supporting this disaggregation of content by each producer. Netflix already has the tech, the infrastructure, the apps, which I'm already paying for. Do I have to pay for it 2x, 3x, 4x?
I'm sure it will provide value to some and not others. Overall I believe it's smart move for Disney.
[1] https://www.forbes.com/sites/maurybrown/2014/07/07/the-bigge...
Netflix for Hollywood was just a middleman that siphoned away their profits. Disney is just removing them from the equation because they feel they can run their own streaming service and capture more value than they provide. You only use middlemen when you have to, and they decided they don't have to any longer. And this lets them charge more and give customers more value too. A $30 a month sub with access to everything makes more sense than slowly rotating old shows for a $10 sub.
It's the same reason that Disney doesn't operate its own movie theatres: it doesn't have any competitive advantage in this area.
Disney can offer "a $30 a month sub with access to everything" through Netflix. That is, Netflix would offer a 'Netflix channel' for $10 per month or a 'Disney Channel' for $30 per month.
Keep in mind that Netflix doesn't have much bargaining power - if they ask for more than say a 7% cut of that $30, Disney can just build their own streaming service for around 7%. Therefore it's in Netflix's interest to offer to host the Disney streaming channel for a percentage that is just a bit less than would cost Disney to build their own streaming service.
As for customer support, Disney has always been excellent at that. Go into a Disney store or theme park sometime for an example. Heck, they invented the "customer is a guest" service concept (outside the hotel context).
(Edit: changing revenue to income.)
[edit] about 1/3 of the parks:
Studio: 9,441
Consumer Products: 5,528
Parks/Resorts: 16,974
Media Networks: 23,689
Put another way, current sports is more valuable to Disney in terms of actual revenue and profit than every movie they've made in nearly 100 years of existence.