May 14, 2018
Disney is planning to launch a branded subscription streaming video service in 2019, the same year its exclusive landmark pay-TV window distribution deal with Netflix for original movies expires.
The pending change is noteworthy considering Disney has owned the box office in recent years with its successful slate of Marvel superhero movies, Pixar Animation titles and Star Wars.
At the May 14 MoffettNathanson Media & Communications Summit in New York, Netflix CCO Ted Sarandos was asked about the impact of Disney going direct-to-consumer and pending loss of its original movies.
“People always ask me, ‘where you surprised Disney is going to go direct?’ I don’t know what took them so long, exactly,” said Sarandos.
The executive said that with Netflix releasing 1,000 original programs this year, including scripted series and movies, the pending loss of Disney movies would be measured.
Interestingly, catalog Disney movies made from 2016-18 (and older) will remain on Netflix after 2019 – as well as Disney’s OTT service.
“[Our subs] watch [Disney movies], but it wasn’t particularly passionate watching and those films are widely available on a bunch of other channels,” Sarandos said.
The executive contends Netflix will continue to differentiate programming in an effort to better compete against Disney, Amazon Prime Video, Hulu and foreign OTT video competitors.
Sarandos wonders how Disney will accommodate switching from content licensing (Netflix shelled out more than $300 million annually to Disney) to content cost when it goes consumer-direct.
“Turning that revenue into a cost is going to be an interesting balance, but they’ve got great brands and they will figure it out,” he said.