August 4, 2020
Facing a stagnant theatrical market due to the coronavirus pandemic, Disney is going all-in to accelerate content distribution to consumers in the home.
Following a letdown in third-quarter (ended June 27) new subscription video-on-demand subscribers, Disney CEO Bob Chapek Aug. 4 was quick to announce that branded SVOD service Disney+ topped 60 million paid subscribers through Aug. 3 since its launch on Nov. 12, 2019. The platform ended the fiscal third quarter (ended June 27) with 57.5 million subs.
Disney+ has added almost 6 million subs since May 4 when Disney chairman Bob Iger announced the platform had attracted 54.5 million paid subs. That compares with nearly 11 million net new subs for rival Netflix during a similar three-month period.
In another blow to besieged movie theater operators, Chapek said the studio is rejiggering distribution of original content, including sending erstwhile theatrical releases to consumer homes on premium video-on-demand via Disney+.
Disney, which has dominated the global box office in recent years, had until now avoided PVOD, repeatedly pledging solidarity with theatrical distribution. That mindset has apparently changed with Chapek, former head of the studio’s home entertainment business.
On the heels of early digital releases of Frozen II, Pixar Animation’s Onward, Star Wars: The Rise of Skywalker and Broadway adaptation Hamilton to Disney+, Chapek said the continued shutdown of movie production and theaters, coupled with favorable consumer response to PVOD and transactional VOD, has altered the company’s distribution strategies.
As a result, Disney+ subscribers in U.S., Australia, New Zealand, and select countries in Western Europe will have premium VOD access to live-action feature Mulan beginning Sept. 4, priced at $29.99 in the United States.
The movie will be simultaneously distributed theatrically in certain markets where there are no announced plans for Disney+ and cinemas are open to consumers.
“We see this as an opportunity to bring this incredible film to a broad audience currently unable to go to movie theaters,” he said. The former home video executive said the revised distribution strategy “further enhances a Disney+ subscription.”
“Given the rapid changes in consumer behavior, we believe it is more important than ever that we continue to grow our direct relationship with our customers,” Chapek said.
Disney, in a competitive challenge to Netflix and Amazon Prime Video, plans to launch an international direct-to-consumer general entertainment offering through its Indian Star brand in 2021. Chapek said the platform would be “rooted” in content Disney owns, including ABC Studios, Fox Television, FX, Freeform, 20th Century Studios and Searchlight.
“In many markets the offering will be fully integrated with our established Disney+ platform from both a marketing and technology perspective,” Chapek said. “It will be distributed under the Star brand,” which Disney acquired through its $71 billion purchase of 21st Century Fox Corp. in 2018.
“We see tremendous opportunity to the direct-to-consumer space,” Chapek said. “In light of the success we’ve achieved thus far with our global DTC business … we intend to take full advantage of that opportunity.”
Disney+ is set to continue global rollout in Scandinavia, Belgium, Luxembourg and Portugal in September, and Latin America in November. The company is also rolling out a hybrid Disney+Hotstar branded streaming service in Indonesia Sept.5.
“By yearend, Disney+ will be available in nine of the top 10 economies in the world,” Chapek said. The CEO said the success of Disney+, ESPN+, Hulu and Hulu with Live TV (combined 100 million subs) underscores the company’s focus on direct-to-consumer distribution.
“This is a reaffirmation of our [DTC] strategy … and to be more aggressive in our growth,” Chapek said.