StarzPlay Streaming Marvel Movies Ahead of Disney+ Euro Debut

Disney’s subscription streaming service is coming to Europe and other regions outside the United States. But Lionsgate’s StarzPlay is already streaming Marvel movies in the Middle East and North Africa (MENA) region.

Due to pre-existing arrangements, Marvel superhero titles such as Iron Man, starring Robert Downey Jr., Iron Man 2, Iron Man 3; Captain America: The First Avenger, Captain America: The Winter Soldier, Captain America: Civil War, and Guardians of the Galaxy, Guardians of the Galaxy Vol. 2 and The Avengers: Endgame are all available on the $8.99 monthly service.

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Disney and Starz last year made a marketing deal enabling Starz-licensed Star Wars: The Force Awakens to be available instead on Disney+ when it launched on Nov. 12, 2019.

Before the launch of Disney+, CEO Bob Iger told analysts the company was “encumbered” by licensing arrangements it had with a number of different distributors, notably Netflix and Starz.

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Iger: Disney Sticking to 90-Day Theatrical Window

Late last year, Disney CEO Bob Iger said the company was considering steps to expedite access to select studio box office titles into retail channels — a move that could shorten the venerable 90-day theatrical window for new-release movies.

No sooner had he said that, Iger reiterated his ongoing support affording exhibitors such as AMC Theatres and Regal exclusive access to movies upon release.

“We have a studio that is doing extremely well and a [release window] formula that is serving us really well in terms of its bottom line,” he said last November.

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Indeed, any mention of shortening Disney’s massive theatrical gravy train for the sake of earlier access on DVD/Blu-ray Disc and digital, seemed shortsighted.

Disney ended 2019 with seven movies each generating more than $1 billion at the global box office. The studio ended the previous fiscal year with nearly $10 billion in ticket sales.

Regardless, the seeds of doubt had been sowed, prompting one analyst on the Feb. 4 Q1 fiscal call to ask Iger if he would “recommit to the theatrical window.”

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“The theatrical window is working for this company, and we have no plans to adjust it for our business,” Iger responded.

With upstart Disney+ streaming service getting every original studio release, domestic exhibitors saw a near 7% decline in tickets sold in 2019 compared to 2018.

Iger suggested the analyst’s question was a reflection how other studios are positioning their films and distribution business.

“We’re not the only movie company,” he said. “I suspect that [questions about the window are] not due to us or either a lack of conviction on our part or any suspicion that we might not be telling the truth. It’s working for us, and we have no plans in the foreseeable future to change it.”

 

Bob Iger: Hulu Taking Backseat to Disney+ Global Launch

Disney is moving ahead with plans to launch the Disney+ streaming service in Europe and India (co-branded with Disney-owned Hotstar) next month. Hulu will have to wait its turn. That’s the portfolio of riches CEO Bob Iger has to deal with.

Despite Hulu having more than 30 million subscribers and being a household name in the United States, Disney is putting marketing muscle behind Disney+ with hopes of generating upwards of 90 million subscribers by 2024. The SVOD service ended Feb.3 with 28.6 million subs.

London-based Goldmedia contends up to 7.6 million consumers in the U.K. have indicated a desire to use Disney+ when it launches there on March 24th.

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“We are working up a plan to take Hulu internationally. We actually have a lot of specifics around it. But we’ve decided that the priority needs to be Disney+,” Iger said on the company’s Feb. 4 fiscal call.

Indeed, following the Disney+ launch in India on March 29, the service will expand globally, including Latin America, through 2021.

“We feel that we need to concentrate on those launches, in the marketing and the creation of product for those and then come in with Hulu right after or soon after that,” Iger said.

With rival Netflix’s first-mover status touting 167 million global subscribers worldwide, Disney is spending lavishly to bridge the SVOD divide.

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CFO Christine McCarthy said the company’s Direct-to-Consumer & International segment (which includes Disney+, Hulu and home entertainment) is expected to generate about $900 million in operating losses for the current second quarter (ending March 31).

“We expect the continued investment in our DTC services, specifically Disney+, and the consolidation of Hulu to drive an adverse impact on the year-over-year change in operating income of our DTC businesses of approximately $520 million,” McCarthy said.

Regardless, the change in focus contributed to Hulu CEO Randy Freer’s previously-announced departure as Disney revamps the service’s management.

 

Disney+ Ended Q1 with 26.5 Million Subs; Adding 2.1 Million Through Feb. 4

Disney’s high-profile subscription streaming video platform continues to produce subscribers — and costs.

Disney Feb. 4 revealed the SVOD service ended the first quarter (ended Dec. 31, 2019) with 26.5 million subscribers, up significantly from the 20.8 million projected following the service’s Nov. 12 launch. Disney+ generated 10 million subscriptions in the first 24 hours.

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“We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations,” CEO Bob Iger said in a statement. “Thanks to our incredible collection of brands, outstanding content from our creative engines and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment.”

Indeed, Disney+ has almost caught (Disney owned) Hulu, which ended 2019 with 27.2 million subs. Netflix ended the year with 61.4 million domestic subs.

At the same time, Disney’s Direct-to-Consumer & International segment, which includes Disney+, saw revenue increase from $900 million to $4 billion and segment operating loss grow from $136 million to $693 million. The increase in operating loss was due to costs associated with the launch of Disney+, the consolidation of Hulu and a higher loss at ESPN+. These increases were partially offset by a benefit from the inclusion of the 20th Century Fox Film business, and due to income at the international channels, including Star India.

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Disney’s Record $10B Global Box Office Suggests Rosy Home Entertainment Future

Walt Disney Studios set a record $10 billion in worldwide box office ticket sales through Dec. 8 with current theatrical hit Frozen II — a notable milestone achieved without a “Star Wars” movie or breakout 20th Century Fox title.

Disney in July broke its previous $7.6 billion box office haul. Fox Studios’ theatrical titles topped $2 billion at the box office.

For home entertainment, Disney’s fiscal largess is a gift that keeps on giving despite ongoing consumer migration toward over-the-top video distribution.

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Disney titles have historically performed well in sales of DVD and Blu-ray Disc, and more recently in digital sellthrough as well. Despite launching a branded SVOD platform featuring original movies, Disney will continue to stream new releases after their retail window.

And that’s a no brainer when looking at recent movie sales.

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Marvel Studios’ Avengers: Endgame is the top-selling disc in 2019, according to VideoScan. Captain Marvel, Bohemian Rhapsody (Fox), Toy Story 4 and Aladdin all rank among the top 10 this year.

It’s a trend Disney Home Entertainment has driven the past four years.

In 2016, Disney led all studios at retail disc sales with Star Wars: The Force Awakens, supported by Pixar’s Finding Dory, Zootopia and Captain America: Civil War.

The next year Disney again topped retail disc sales with Moana and Beauty and the Beast.

In 2018, Disney home entertainment outdid itself, spearheaded by Black Panther, Avengers: Infinity War, Star Wars: The Last Jedi, Coco and Thor: Ragnarok.

Last November, CEO Bob Iger Iger gave a shout out to home entertainment — his first in years — which he said continued to deliver strong retail results in the face of OTT.  At the time Iger suggested there was ongoing internal strategy about putting theatrical content into retail channels sooner.

“The home video window continues to be quite important to us,” he said. “You’ll likely see us protect that as well, although there’s going to be discussion around whether there’s an opportunity to move product into that window maybe a little sooner.”

To date, Disney’s 90-day theatrical window remains largely intact.

 

 

 

Disney’s 20th Century Fox Film Purchase Continues to Underwhelm Financially

Less than six months into Disney’s protracted $71.3 billion acquisition of 20th Century Fox Film and related assets, including Fox’s Hulu stake, the mega transaction continues to underwhelm on the bottom line.

Fox Studios generated a $120 million loss for Disney in the most recent fiscal quarter — driven by box office disappointments Ad Astra, Dark Phoenix and The Art of Racing in the Rain, according to CFO Christine McCarthy.

“The loss from the Fox Studio business was $100 million higher than the loss we estimate the business generated on Q4 last year,” McCarthy said on the Nov. 7 fiscal call.

The CFO attributed consolidation of Hulu’s operating losses (about $1.5 billion for fiscal year) and inter-segment eliminations that resulted in an adverse impact to segment operating income of about $170 million.

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“We estimate the acquisition of [20th Century Fox] and the impact of taking full operational control of Hulu had a total dilutive impact on our Q4 [earnings per share] before purchase accounting of $0.47 per share,” McCarthy said.

Indeed, Fox generated about $260 million in combined ticket sales from six movies halfway through 2019, which was $100 million less than just the opening weekend of Disney/Marvel’s Avengers: Endgame.

Dark Phoenix had the lowest box office of any “X-Men” franchise movie, which resulted in Disney taking an impairment charge on the film.

The results continue what CEO Bob Iger lamented in the previous quarter about Fox’s performance being “well below where it had been, and well below where we hoped it would be when we made the acquisition.”

And the outlook isn’t getting better anytime soon.

McCarthy expects an operating loss in the current first quarter (ending Dec. 31) of about $60 million at the Fox studio, compared with about $30 million operating income in the previous-year period.

“We estimate the acquisition of Fox and the impact of taking full operational control of Hulu will have a dilutive impact on our Q1 earnings per share before purchase accounting of about $0.30 per share,” she said.

McCarthy remains hopeful the Fox acquisition will be accretive to EPS before purchase accounting for fiscal 2021.

 

Disney+ Launching in Western Europe March 31, 2020

Disney’s high-profile subscription streaming video service is launching in the United States, Canada and Holland on Nov. 12. The platform will be rolled out across Western Europe (United Kingdom, France, Germany, Italy and Spain) on March 31, 2020.

CEO Bob Iger made the announcement during the company Nov. 7 fiscal webcast, saying test runs in Holland had proved successful.

“Even without access to our full library or any original content, the service connected with users across all four quadrants, male and female, adults and kids, driven by the breadth of our content and the affinity people of all ages have for it,” Iger said about the previously disclosed Dutch tests.

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He said Disney has spent the last few years “completely transforming” the company through strategic acquisitions [i.e. BAMTech, 20th Century Fox, Hulu] and organizational changes to focus the resources and creativity across the entire company on delivering an “extraordinary” DTC experience.

Disney’s direct-to-consumer segment is projected to lose upwards of $850 million in the current first quarter through ongoing investments in Disney+ and consolidation of Hulu — the latter ending the fiscal year with 28.5 million subscribers.

“We’re making a huge statement about the future of media and entertainment and our continued ability to thrive in this new era,” Iger said.

Disney+ Going to Amazon Fire TV, Samsung, LG Smart TVs; FX Upping Production for Hulu

In a major PR boost for its over-the-top platforms, Disney CEO Bob Iger Nov. 7 said the company’s pending SVOD service, Disney+, would be available on Amazon Fire TV, in addition to Samsung and LG smart televisions when the service launches on Nov. 12.

Separately, Iger said the FX Network would begin to stream original and catalog programs on Hulu as Disney plans to expand the SVOD service overseas.

The FX catalog includes about 40 original series earmarked for Hulu, with new episodes available to stream the day after airing on the FX Network.

This is the first time a cable network has made its programming available for streaming just hours after initial broadcast.

“This is a watershed moment,” analyst Richard Greenfield with LightShed Partners, said on Twitter.

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FX will continue to honor existing distribution deals with Netflix and Amazon Prime Video before migrating them to Hulu.

Other FX shows include “Atlanta,” “Better Things,” “Fargo,” “Mayans,” “Pose,” “Snowfall” and “What We Do in the Shadows.” New titles include “The Last Man” and “Breeders.”

Iger said cable network FX programming, such as “American Horror Story,” “The Americans,” “American Crime Story,” “A Teacher,” “The Old Man,” and “Devs,” would feature significantly on Hulu.

Twentieth Century Fox’s super hero franchise “Deadpool” will also stream on Hulu.

Iger said Fox Searchlight would also produce original programming for Hulu — despite the studio’s existing output deal with HBO. The CEO hinted that agreement may be changed in the near-term to facilitate Hulu’s planned expansion into the United Kingdom.

Disney Doubles Direct-to-Consumer Segment Loss to $740 Million

Acquiring control of Hulu and launching a branded subscription streaming video service is expensive.

Disney Nov. 7 reported it lost $740 million in its nascent direct-to-consumer (DTC) business unit in the fourth quarter (ended Sept. 30) — more than double the $340 million operating loss in the previous-year period.

DTC oversees Disney’s foray into over-the-top video distribution, which includes the acquisition of backend support technology provider BAMTech.

The segment generated revenue of $3.4 billion compared to revenue of $825 million last year. For the fiscal year, DTC revenue topped $9.3 billion compared to revenue of $3.4 billion in the previous period.

Operating loss skyrocketed to $1.8 billion in the fiscal year compared to an operating loss of $738 million last year.

The increase was due to the consolidation of Hulu (from Comcast), costs associated with the upcoming launch of Disney+ and ongoing investment in ESPN+, which was launched in April 2018 and has more than 3.5 million paid subscribers. The losses were partially offset by a benefit from the inclusion of the 20th Century Fox businesses driven by income at Star India.

Disney+, which launches on Nov. 12, is not expected to turn a profit until 2024.

CFO Christine McCarthy said Disney’s direct-to-consumer segment is projected to lose upwards of $850 million in the current first quarter through ongoing investments in Disney+ and consolidation of Hulu — the latter ending the fiscal year with 28.5 million subscribers.

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Separately, Disney said studio revenue increased 52% to $3.3 billion and segment operating income increased 79% to $1.07 billion.

Higher operating income was due to an increase in theatrical distribution results, partially offset by a loss from the consolidation of the Fox businesses. The increase in theatrical distribution results was due to the performance of The Lion King, Toy Story 4 and Aladdin in the current quarter compared to Incredibles 2 and Ant-Man And The Wasp in the prior-year quarter.

Operating results at the Fox businesses reflected a loss from theatrical distribution driven by the performance of Ad Astra, Art of Racing In The Rain and Dark Phoenix, partially offset by income from TV/SVOD distribution.

“We’ve spent the last few years completely transforming The Walt Disney Company to focus the resources and immense creativity across the entire company on delivering an extraordinary direct-to-consumer experience,” CEO Bob Iger said in a statement. “We’re excited for the launch of Disney+.”

Disney+ Running Starz Banner Ad in Exchange for Streaming Rights to its Own Movies

Disney CEO Bob Iger says he has no regrets licensing pay-TV rights to original movies for big dollars to Netflix and Starz.

Then came Disney+ and the rush to over-the-top video distribution.

Disney’s massive push to bridge the SVOD divide with Netflix (and Amazon Prime Video) through a branded SVOD service stocked with original movies and TV shows ran into legal challenges since many Disney movies were earmarked for competing distribution channels through pre-existing license agreements.

Thus, getting the company’s singular corporate initiative in 2019 to launch on time reportedly required some creative legal maneuvers behind the scenes.

Disney+ and ESPN+ will run banner ads for the Lionsgate owned Starz pay-TV and standalone SVOD service in exchange for exclusive streaming rights to Star Wars: The Force Awakens, among other titles.

Harrison Ford in ‘Star Wars: The Force Awakens’

The $6.99 Disney+ service had been touted as ad-free. And indeed, there will be no Starz advertising within Disney+ and ESPN+ platforms.

First reported by The Verge and confirmed by Disney, the banner ad will limited to the log-in page and is part of a revised license agreement enabling Disney+ to have access to original movies previously slated for Starz.

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“I think as you can see from what we’re making available, and from seeing some of the titles that we’re making available at launch, there’s been a lot of effort that went into bringing it all back together so that we could make it available on the service,” Michael Paull, head of Disney streaming services, told The Verge in August.

“It’s clear that, from a library perspective, while there’s certainly a lot of volume, the recent studio slate will not fully be available at any one time because of the existing deals and it would take time for those rights, ultimately, to revert back to us,” Iger said last summer.

Agnus Chu, head of content at Disney+, contends license agreements can sometimes be split up “100 different ways.”

“Where it’s been licensed to, who it’s licensed to, and for how long, that gets very complicated,” he said.