Star Wars spinoff helps Disney play catch-up with Netflix | Business| Economy and finance news from a German perspective | DW | 13.11.2019
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Star Wars spinoff helps Disney play catch-up with Netflix

The launch of the Disney+ streaming platform includes an eight-part Star Wars series, The Mandalorian. The entertainment giant will increasingly face a battle for viewers against gaming and social media sites.

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The Walt Disney Company on Tuesday launched its Disney+ video streaming platform in the US and Canada, in an attempt to recoup ground lost to Netflix. In doing so, the entertainment giant also takes on Amazon Prime, Apple TV+ and even Hulu — a streaming competitor Disney co-owns with Comcast's NBC Universal.

TV industry insiders predict Disney will seize the opportunity to bypass the regular distribution channels for its blockbuster movies, series and own-brand TV channels, and put almost everything it creates on the new platform.

"They have very aggressive ambitions for Disney+, which for the first time allows them to connect directly with global consumers," Tony Gunnarsson, a streaming analyst at the London-based media consultancy Ovum, told DW.

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Even so, eschewing longtime business relationships with cable and satellite networks is seen by some in the industry as a risky strategy, considering Disney's media networks are responsible for 39% of overall revenue, some $27.3 billion (€24.7 billion) in 2018, and Netflix has benefited from a near decadelong head start.

Disney puts streaming first

Gunnarsson insisted the risk was a lot lower than five years ago when streaming was still in its infancy. He noted that Disney is the first of the traditional media conglomerates to undertake a thorough restructuring, to put streaming — including the valuable ESPN sports platform — at the core of its business strategy.

Infographic about linear TV's relevance in an age of streaming

"Disney+ will cost them a lot of money initially, as they will lose revenues from not selling content to third parties and distributors. But they are banking on subscriptions on a huge scale, with comparable figures to Netflix."

Disney+ has targeted 60 to 90 million global subscribers by the end of 2024, compared to 158 million currently for Netflix. Subscribers will, for $6.99 a month, have exclusive access to blockbusters from Star Wars, Marvel, Pixar, and Disney's own studios. The entertainment giant has also committed $1 billion to original programming — a far cry from the $12 billion Netflix spent last year, or Amazon and Apple's $6 billion budgets. But then Disney already produces $24 billion of content each year (movies and TV).

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The platform's first series, which also launched on Tuesday, was the eight-part Star Wars spinoff The Mandalorian, which is set five years after the events of Return of the Jedi. The blockbuster movie, Avengers: Endgame, is also exclusively available to stream. Other upcoming original shows include the comedy series Diary of a Female President and a mockumentary series of High School Musical. The firm's takeover of 21st Century Fox earlier this year will also mean Disney+ will stream all 30 seasons of The Simpsons.

Several subscriptions needed

Gunnarsson told DW the streaming revolution, which Netflix continues to dominate, has only just begun and that new platforms like Disney+ will "come into their own in three to five years." He said research shows that consumers are increasingly willing to buy several streaming subscriptions and that Disney's incredible content catalog will be a strong pull. "In the US, the average household subscribes to around four services, while in Europe it's more like two to three," he said.

Infographic of US consumers' perceptions towards Disney+

The streaming analyst thinks while Disney+ will quickly ramp up subscriber numbers, Netflix will remain top dog in the streaming space, due to the sheer variety of content. The real threat, Gunnarsson added, is not the cannibalization of the streaming market by newcomers like Disney+ but the sheer quantity of media options available to young people, including social media and gaming platforms.

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"Young people are spending three hours watching others play Battlefield 5 on YouTube and just two hours watching Netflix," he told DW. With new subscription gaming platforms also rising in popularity, users will have vast catalogs of interactive content that can keep them engrossed for hours without the need for video.

Disney+ launches in the US, Canada and the Netherlands on Tuesday, followed by Australia and New Zealand on November 19. Next up is Western Europe (Germany, Britain, France, Italy and Spain) on March 31, 2020. The platform plans a progressive global rollout after that.

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