Is a Disney Streaming Service a Good Idea?

Entertainment provider Disney, creator of fare from the classic Snow White and The Seven Dwarfs to the contemporary fable Toy Story, recently announced that it would be pulling its content from current venues like Netflix and putting them on its own streaming services.

One streaming service, dedicated to Disney-branded content, is scheduled to roll out in 2019. A second, focused on Disney’s sports property ESPN, is planned to roll out in 2018. Subscribers would have to sign up for these services rather than seeing the content on currently existing streaming services such as Netflix or Hulu.

This is big news because Disney is one of the most recognized and popular brands on the planet. Indeed, the Los Angeles Times quotes one observer as saying “Disney can feature the most valuable content library in the world.” Disney’s ownership of Pixar (maker of Toy Story), Marvel Entertainment, Lucasfilm (Star Wars), and ESPN all combine to make it a super-provider of content.

However, the idea is not universally popular with consumers. Fifteen thousand signed a petition asking that Disney not pull its content from Netflix. Effectively, the move requires current Netflix users who enjoy Disney content to pay again to continue to receive it.

Will consumers pay for a Disney streaming service?

Good Idea? Some Say Yes…

Is it a good idea? Votes on the ultimate viability of the business strategy are mixed.

Those who enthusiastically embrace the move note that Disney’s content positions it well to attract a healthy subscriber base.

But it’s not only a content story; it’s a business provision one. The move is technology news, simply because it underscores how much the home entertainment business model is transitioning from provision of cable channels to provision of streaming services.

In its most recent financial quarterly report, Disney noted that its cable income had fallen 23%.

Drops of this kind are widespread throughout the entertainment industry. Last year, cable operators overall registered 1.3 million fewer customers than they had in 2015.

Overall, the model first pioneered by Netflix and characterized by streaming and the ability to binge watch an entire season rather than a weekly program chosen by a network is transitioning to the preferred customer model. Consumers of the future are likely to go first to streaming services delivered through an app, rather than to television and cable channels.

…and Some Say No

But some observers don’t embrace Disney’s move. Peter Fader, a marketing professor at the University of Pennsylvania’s Wharton School, believes that Disney ought to stick to its historical strengths in content provision rather than becoming a distribution arm. After all, he points out, the creation of desirable content is what built Disney into a powerhouse to begin with.

He also believes that Disney may find that restricting access to its content, which providing it only on its streaming service will do, is less effective for the company than making it more widely available.

What will the future hold for Disney and the other streaming providers? Stay tuned.