Wednesday 20 February 2019

Disney to unveil streaming service to rival Netflix

'Among traditional media companies, Disney is making the biggest bet on streaming and monthly subscriptions.' Stock image
'Among traditional media companies, Disney is making the biggest bet on streaming and monthly subscriptions.' Stock image

Christopher Palmeri

Walt Disney will show off its highly anticipated Disney+ streaming service at an April 11 investor meeting, providing a peek at a platform that will challenge Netflix head on.

The service, which will include original movies and TV shows from Disney's Marvel, Pixar and other brands, is scheduled to debut later this year. It will be a third, more family-focused streaming service, on top of Disney's existing ESPN+ and Hulu, which will soon be majority owned by the Burbank, California-based entertainment giant.

Among traditional media companies, Disney is making the biggest bet on streaming and monthly subscriptions. The company will soon complete the $71bn purchase of 21st Century Fox's entertainment assets, which will bring in more film and TV franchises it can exploit in theatres, on TV and online.

After that deal was announced in late 2017, Disney reorganised its business to create a standalone direct-to-consumer division for streaming. In a filing last Friday, the company provided details on how that business and all of Disney's divisions would have looked under the new structure for the past three years.

Disney's direct-to-consumer division, for example, lost $738m on revenue of $3.4bn for the fiscal year that ended September 29. Those numbers reflect the company's investment in new content and technology, without the full benefit of subscription revenue from the new streaming service still in development and ESPN+, which was introduced in April.

Disney executives have been preparing investors for what might be a transitional year, due to investments in the new services. Chief Financial Officer Christine McCarthy said in November that costs associated with ESPN+ would reduce profit by $100m in the just-ended fiscal first quarter.

On a conference call with investors last Thursday, Netflix CEO Reed Hastings said an onslaught of new streaming services from Disney, AT&T and others doesn't concern him because US consumers spend a billion hours a day watching video.

"They have great content," Hastings said of Disney. "We're excited for their launch, and maybe they grow over a couple years to 50 million hours a day, but that's out of the billion."

Bloomberg

Bloomberg

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