Futuresource: Disney+ signals new international pay-TV paradigm but questions remain | VOD | News | Rapid TV News
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The day has arrived and the House of Mouse is to unleash, on a not very unsuspecting world given the pre-launch marketing, Disney+, an act that analyst Futuresource says heralds a new commercial model for the industry.
disney 12April2019
Intrinsically, Futuresource is bullish about the prospects of the new SVOD service which will roll out initially in the US, Canada, Australia and the Netherlands. It expects that in all of the key markets that it will arrive in – Disney announced that the rest of West Europe will receive the offer by the end of March 2020 – Disney+ will challenge for the number two or three SVOD position behind Netflix and Amazon Prime Video. With approximately 600 movies and TV show franchises, the analyst regards the Disney+ depth of content at launch is impressive, providing a long tail of Disney content unmatched on existing services and with strong appeal to families.

Futuresource estimates that around two-thirds of Disney+ subscribers will have children under 12, and adds that with this base crucial in helping maintain overall subscriber loyalty to the service across the long term. Furthermore, as rollout accelerates, Futuresource says that the arrival of Disney+ does not necessarily mean that global pay-TV operators will be excluded from carrying the content, instead it heralds the beginning of a new commercial paradigm.

It noted that services such as Sky and Canal+ have enjoyed exclusive licensing agreements with Disney, with movies in the first pay-window key to this. However, the analyst believes that Disney will still be keen to maximise distribution and therefore will likely look to maintain relationships with pay-TV operators, seeking carriage of Disney+ as an app or through more sophisticated integration. It cites Netflix on Sky in the UK as a key example.

Yet despite the optimism, Futuresource cautions that a number of questions remain, not least when reviewing the opportunity beyond its launch markets. The analyst notes that Disney’s current licensing deals in the USA, Canada, Australia and Netherlands have expired allowing it to launch with a significant library of TV shows and movies and perhaps of greater importance, movies in the first pay window which in the coming months will include recent box office smashes such as Avengers Endgame, Lion King, Toy Story 4 and Aladdin and new content such as The Mandalorian. Futuresource observed that the four launch markets are also amongst the most penetrated subscription video-on-demand markets in the world and will provide a good read for likely success in other countries.

But commercial terms are expected to differ significantly to the previous distribution deals, with both parties entering what is effectively uncharted territory, with each side potentially having differing views on where the balance of power in the negotiations sit. Canal+ in France is already said to have agreed a deal, hot on the heels of its Netflix announcement. This said Futuresource, indicates a continually evolving mindset amongst the leading pay-TV operators in terms of their relationship with third party, particularly DTC service providers.

In addition, whilst the delayed rollout outside of its core markets was inevitable, Disney is yet to give any indication of how its flagship exclusive series The Mandalorian will be distributed in the interim, potentially to the frustration for many Star Wars fans in these countries.

Summing up its reservations, Futuresource said: “What is clear is that the premiere of Disney+...is the start of an evolutionary process both for the service and the strategy of the now wider Disney group as a whole. The launch comes as the integration of Fox into Disney is all but wrapped up, but the role of Fox content distribution is less clear, particularly on an international basis. What role will Hulu play in this? How will Disney choose to manipulate the first pay window? And what role do transactional movies play? These are just some of the areas to be considered and tackled over the coming months and years.”