The Rise of Disney+

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The best lingering question from the Disney presentation has nothing to do with Disney:

How long until we get these type of details from Comcast-NBCU, AT&T-Warners or Apple?

The wild enthusiasm that accompanied Disney’s parade of content is what Apple was going for two weeks ago. But Disney actually did it because, well, they have the content. Content is still king. But I’m getting ahead of myself.

Most Important Story of the Week – Disney+ Announcement

When Apple unveiled Apple+ and Apple Channels, I mentioned how much I love the traditional “marketing framework” of 3Cs-STP-4Ps. My biggest gripe about Apple was they didn’t tell us anything. Price? Distribution? Content even? We knew hardly any of it. Not so with Disney! In fact, we can use my “Digital Video 5Ps” to evaluate the offering. (I added a P, you’ll see.) Though, to quote myself, you can’t use the 5Ps until you know who you’re targeting.

(In the parentheses, I’ll put my unasked for recommendations, as if Disney needs them.)

Who are they targeting?

Disney families.

That’s my gut, without seeing the actual marketing plan. Disney has always been about the family and it is the king of tent pole films that the entire family can see, from Star Wars to Pixar to Marvel. They want families to buy, watch and travel Disney. So how do their 5 Ps reinforce that target segment?

(Recommendation: None. This is the right segment. And yes, everyone should have a segment. “Everyone” is not a segment.)

Product – Content

Content is still king, so it goes first. This is the most important piece of any digital video service. And Disney owns the best real estate on the content landscape. My working hypothesis is that Disney films were the most popular content on Netflix. And since Netflix doesn’t release data, I can’t be proven wrong. When it comes to box office, toys, even TV ratings for its movies in the second window on TNT, FX and other movie channels, Disney’s content gets the most eyeballs. Launching with such an incredible bench of content is a huge advantage.

That will help the launch, and presumably the movie teams under Alan Horn will continue to work their magic–though, I do have a “Disney Nightmare Scenario” article half-sketched out about how it could all go wrong here–but are the new TV teams up to the task? That I honestly don’t know. A lot is riding on the armored shoulders of The Mandalorian.

(Recommendation: Dig through the Disney TV library too. Gargoyles, Rescue Rangers and old Mickey cartoons are all prime candidates for this service. That can instantly add hundreds of hours of kids content. Kids need “new” less than any other demographic.)

Product – UX

No one chooses to watch Netflix because it has a good user experience. In fact, people are complaining that the UX can be hard to navigate with so much content, so many scrolling windows and auto-playing previews. But people still use it. Because the content and price.

Still, don’t neglect the product experience. Hulu, with its tremendously long ad-breaks that repeat the same commercials, makes people crazy. Apps that crash drive people crazy too. Amazon Prime pretending you can watch a movie, but then asking you to pay for it bugs people.

Behind any product from a UX perspective are teams and teams of product managers, with senior product managers, and eventually bosses up at the top. (Or sometimes at an outsourced company. Sigh to that.) I wish I could tell you I had some statistical way to measure how good product teams are at fixing and improving their products. Especially, before they launch. (In fact, I’ve thought about how to measure this.) BAMTech–the company Disney acquired that the MLB launched to handle its sports streaming–has a lot of experience, and they launched the ESPN+ app, so they’re getting experience on the ground. And I like this initial UX look, even if it will likely iterate ten times before launch:


That feels clean. People said it looked easy to navigate. So I like it. Not needing to support ads also eases the technology burden, while reinforcing the family friendly image by not having to worry about your kids seeing bad ads. And the experience overall will be safer than Youtube. Throw in unlimited downloads and they’re on the right track.

(Recommendation: Avoid auto-play. Use that clever positioning to say, “We’re not Netflix trying to hook you or your kids like a drug.” Engagement is the new tobacco.)

Placement – Distribution

This is the one area we didn’t learn much. Will Disney+ be available everywhere, or only on certain apps? My gut would be they will for sure be available on Hulu (duh), but everything else is up in the air.

Who has the power in the negotiations though? It has to be Disney. If you use Amazon Prime to watch movies, and buy HBO through them, and now you can’t see Marvel films without going to Hulu, does that cause you to switch? If you’re Roku, you gotta get Disney+ on your platform to stay competitive. Again, everything from Captain Marvel to Star Wars: The Rise of Skywalker, to Toy Story 4 will be there.

Tying back to the families, Disney needs to be where families are. Which isn’t only Hulu. That’s why I think they’ll want wide distribution. Let’s monitor this one.

(Recommendation: Go everywhere. Prioritizing your own distribution will hurt your awareness in the long term. Though feel free to offer the best prices/bundles with Hulu.)


If Disney’s biggest strength is content, the second is marketing the hell out of that content. I don’t think anyone should be worried about not knowing that this product is launching. Even if they used no paid advertising, their owned & operated channels will get the word out. Or their marketing partnerships tied to the launch. Or their marketing partnerships tied to the huge winter film releases. So many options.

(Recommendation: I’ve been pounding this drum, but c’mon Disney, offer me three months if I go to a theme park for a day. We’re debating a California Adventure trip in the fall off season–Cali-locals plan trips strategically–and a three free month trial would put it over the top.)


Here’s the news everyone is talking about. $7 a month. (Seriously, everyone, round up to the nearest dollar.) I love this price. Love, love, love. (Or $70 for the year.)

The lower price point makes sense because the sheer volume of hours of content is less for Disney, and even if it is exponentially more valuable (and that exponent talk is not an overstatement), it is still less content. Positioning yourself as an add on to Hulu or Netflix is the smart positioning. Every family can afford $7 right now.

This will likely cause them to lose a fortune. Don’t pretend otherwise. Forgoing all the licensing revenue and home entertainment and rentals is costly. But the goals for Wall Street are subscribers and ignoring the cash burn. So I like it from a strategic messaging standpoint. My guess is it will last 18-24 months before it goes up to $8.

(Recommendation: Avoid the siren call of promotional deals on the price itself. Offer free trials. Those are great to get people in, but keep the price point sacrosanct. Seriously.)

My only final caution is to monitor the global roll out. On the one hand, I like that there goal isn’t to just “go global” at one time. It’s better to launch each territory when you have a product and marketing plan in place first.

Other Candidates for Most Important Story

Disney wasn’t the only army moving it’s forces into position in the #StreamingWars.

Youtube Raising Prices on vMVPD

I think we all see what’s happening with vMVPDs, right? If you still have to pay subscriber fees, which are per subscriber, and you add them all up, they cost a bunch of money. Like $50 or so. Which is why every vMVPD is raising prices to hit that threshold. (I need to use a subscriber fees data set to quantify this in a future post.) So this week YoutubeTV raised prices and it shouldn’t have been a surprise.

T-Mobile has a TV Service at Home

T-Mobile is also getting in on the vMVPD game, preparing for a 5G future–and good for them to do that–and it will offer 250 channels for $90. And they could still be losing money on it. Again, I need to add up all the math here but vMVPDs aren’t cheap.

Long Read of the Week – Nate Silver on What “70%” Means and More on Predictions

I love predicting things. I predicted how much Disney will make on the Lucasfilm acquisition and set a range for how much money the Pac 12 needs to make on its next rights deal to make its money back, for example. My favorite is my prediction on M&A activity in entertainment, media and communications. A lot of people made predictions on this subject (yeah I’m talking to you. You know you did) but hardly anyone quantified it. I did. And just this week, I set off on a fantastical adventure to predict which series will make the most money for it’s corporate streaming overlord.

I love when others predict things too. Well, kind of. I love how Nate Silver does with his clear probabilities attached to everything. I hate how lots of people do it, which is to hide behind generalities. Or to write columns that essentially predict both sides, or have so many caveats you can’t be wrong.

The dirty secret of entertainment executives is they make predictions all the damn time. ALL THE TIME! Essentially, if you’re making a decision, you’re predicting the future. You believe a decision will optimize your future, which means predicting what will happen. Examples include…

– Predicting which scripts will make good movies

– Predicting which pilots will make good series

– Predicting which hires will make good employees

– Predicting which price for your streaming service will make the most money

– Predicting which acquisitions will make money

Usually, executives don’t quantify any of those predictions. Why would they? It might show they are more fallible than they currently believe.

Nate Silver doesn’t share that concern. He’s set out at FiveThirtyEight to quantify how well they’ve been at making predictions across the board. I f-wording love this. (Yeah, curse word level excitement.) This is a very great introduction to quantifying predictions. (Go on to Superforecasting or The Signal and the Noise to learn more.)

Twitter Thread of the Week/Data Point of the Week – Survey Wars on Disney+

If you follow the right people on Twitter, you’ll have seen what I dubbed the “survey squad” in action. These are the people who, when they see particularly egregious surveys, shout out, “Stop! It’s a dubious survey!” I consider myself a member.

So I saw this chart on Twitter from Andrew Freedman at Hedgeye. And wanted to share it, but I worry the squad will call me on it.


Source: Hedgeye Risk Management

It’s a survey of 1,000 people from an investment firm. It compares both WarnerMedia and Disney+ to Netflix, and Warner does better than you would guess, which I assume means they included HBO in it.

Still, this helps reinforce in my mind the idea that if OTTs are the future, churn is the name of the game. Both Warner-Media and Disney+ could take screen time from Netflix.

Listen of the Week – Variety’s “Strictly Business” on Recession Worries

Here’s my dirty secret of “entertainment business” podcasts: I don’t really like listening to them. Podcasting is usually an escape during breaks from writing/reading/researching entertainment, so I stick to basketball and politics podcasts. The other thing is I’m not a huge fan of listening to CEOs talk in generalities. A lot of times they say a lot without really saying anything.

When I do listen, inevitably I find myself jotting down notes on my laptop, to inform future podcasts. That happened with this edition of Strictly Business with Naveen Sarma of S&P Global Markets. (Which now owns what used to be SNL Kagan, I believe.) SNL Kagan crushes it on their research and if I could afford it, I’d have a subscription there again. (Nearly every studio does.) And I’ve been fascinated by the “recession question” but this podcast goes deeper than just that topic.

The Entertainment Strategy Guy

The Entertainment Strategy Guy

Former strategy and business development guy at a major streaming company. But I like writing more than sending email, so I launched this website to share what I know.


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