Is Disney Bringing Back the Vault?

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If the streaming wars were a medieval war, original content are the mounted knights. Especially the pricey TV series. Like knights of the medieval ages, these extremely expensive weapons will likely win the war for one side or the other. This would make the siege engines the tech stack and distribution infrastructure. The logistics supplying and feeding the armies is the hordes of lawyers and finance folks in the bowels of each studio.

But an army is much more than aristocrats in suits of armor. It needs masses of peasants clinging to sticks and spears, ready to be mowed down by mounted knights or crushed under hails of artillery. Who is that in the streaming wars?

Well, library content, of course. 

Over the last few weeks, we’ve gotten quite a bit of news about the size of the various infantry nee “library content” that a few of the new streaming services are rolling out. Let’s run down the news of the last few weeks:

– First, Disney reveals the number of films and episodes for Disney+ in its earnings call.

– Second, Bloomberg reveals Apple won’t have a content library.

– Third, Disney reveals not just the count of its library, but the specific films and TV series.

Altogether, we now know quite about Disney’s plans for Disney+. As a result, I’m going to dig MUCH too deep into it trying to draw out strategic implications and meaning from Disney+’s future content library. Today, my goal is to focus on the strategic dimensions of Disney’s content plan. Its strengths. Its weaknesses. What it says about Disney’s future plans (and constraints to those plans). 

I have two reasons for doing this. First, since Disney+ is fairly small of a library, we can draw a bit more conclusions than we could about some other streaming services—like Netflix or Amazon—which have thousands of movies that change constantly. 

Second, library content really is important. To continue the martial analogy, infantry won’t win the war on its own—smaller armies often best bigger ones—but having a bigger army sure can help. Having the best library content is a tremendous head start. 

Both those points collide in Disney+’s future catalogue. Despite its smaller library, Disney+ may launch with the most valuable content library in streaming. Pound for pound, this will be the strongest film slate on a streaming platform, with a decent TV slate. But I’ll be honest: it may not be as strong as you think. I’m about as bullish as they come on Disney+, but running through the actual numbers has sobered me up.

Let’s dig in to explain why.

What We Know about Disney+

One of the secretly important parts of the last Disney earnings call was their description of their upcoming content slate. Here’s a screen grab of Variety’s coverage, that quote Disney CEO Bob Iger directly:

IMAGE 1 - Variety Quote

If you’re like me, as you pondered this for a later Twitter thread, you captured the pieces in Excel. Like this:

IMAGE 2 My Capture

Unfortunately, we still had a lot of questions. Marvel films? Which ones? Star Wars films? Which ones? And which animated films? Then, before D23—Disney’s annual convention for super fans—Disney provided the answers to some news outlets, like the LA Times, which had had a huge list of confirmed films. So I dug in. 

Disney+ Film – By The Numbers

The obvious takeaway is that Disney+ won’t come close to the volume of films that other film services will have. To calculate this, I’ll be honest I simply googled “film library count” and looked up Amazon, Netflix and so on. I found a few sources for Netflix and fellow streamers. After that sleuthing, here’s my projections for the biggest streaming services.

IMAGE 3 - Est 2020 Film Smales

Here are the key sources I used: ReelGood (Netflix 2014, 2016), Flixable (Netflix 2010, 2018), HBO (current), Variety (Amazon and Hulu 2016) and Streaming Observer (Amazon, Netflix, Hulu and HBO, 2019). The caution is that I’m not sure the Amazon numbers are accurate and that some of the sources aren’t also counting films available for TVOD/EST. But these numbers were reported in Variety and Streaming Observer, so I’m inclined to trust them.

(Also, these were US numbers only. Other countries complicates it, but from what I can tell library sizes tend to be correlated over time.)

As has been reported constantly, Netflix is losing content. Specifically, it can’t license as much content for as cheaply. This showed up in the data: 

IMAGE 4 - 2010 to 2020 Film Slates

As studio launches their own streaming service, they take their films from fellow streamers. While Netflix has suffered the worst, Amazon isn’t immune. Meanwhile, HBO has stayed at the same, small level for most of the last decade. (Some estimates had HBO at 800 films, but counting the available films on their site gives me about 300.) Hulu has been shrinking like the others too. 

You may ask, “Where did the CBS All-Access numbers come from?” Well, that’s Paramount’s library of films, which CBS bragged about in the merger announcement. Obviously most of those films are in licensing deals already, but if SuperCBS really wanted to, they could try to get them back. That is the potential library for CBS All-Access. (And it isn’t as bad as the last ten years suggest. The Godfather? Titanic? Mission Impossible? Those have value.)

The Value of those Disney+ Films

The challenge is to take those raw numbers and try to convert them into actual values. If you’re a streamer, you can build a large data set—and I mean big—with streaming performance, Nielsen ratings, IMDb and other metrics, and judge the value of various content catalogues. While that gets you a very accurate number, at the end of the day we don’t need those extra bells and whistles becasuee we have box office performance.

Box office captures about 90% the value of a movie for a streamer. In other words, if you wanted to know if people like a movie (and will rewatch it), box office explains probably 90% of that behavior. 

So I pulled the last ten years of films, looking for how many Disney films ended up in the top 5, ten and 25. The results are, well impressive. Especially recently. (An additional, very safe assumption: that films released in the last year are more valuable than films released two years ago, and films in the last five years are more valuable than films from ten years ago, and so on.) If Disney can put all those films on its streaming service, in comes the money. So take a look at this table, with the top ten films by US box office, with Disney releases highlighted:

IMAGE 5 Disney Last Five YearsBy my reckoning, that’s 18 of the top 5 films of the last five years, 22 of the top 10 films and 32 of the top 25. Incredible. And I realize I’m not breaking any news here.

So here is some new news. As I mentioned above, Disney released to the LA Times a list of films confirmed for Disney+, and well, it’s quite a bit few films. Here’s the last ten years of top 10 box office films, with the films actually making it on to Disney+ highlighted in blue:

IMAGE 6 Disney Plus Releases

Man, Thanos snapped his fingers and now half the catalogue disappeared.

Disney has sold the rights to a lot of its films to other linear channels, which is talked about a lot less than its deal with Netflix (which is discussed constantly). Between streaming and linear TV, many Disney films have their rights already claimed. So only having 2 library Marvel films at launch really hurts. (And then having Thor: The Dark World which may be the worst Marvel film of the last decade.)

Let’s quantify this further. I pulled four numbers to compare: Total box office by year, total Disney+ box office, Disney’s Top 25 box office. Here’s that table:

IMAGE 6 Table of Box Office

My working theory is that over time, films outside the top 25 decay faster than the biggest films each year. So even though I pulled Disney’s total box office each year, I wanted to focus on the “potential” of the top 25 films. (Honestly, does The Lone Ranger matter if it is on if it is on Disney+?) 

The headline of that table should be the 11% gap between what is potentially available on Disney+ and what will actually be there at launch. What do we make of that?

Constraints – FX and TNT as Case Studies for Pay 2 Movie Rights.

Well, the legacy media companies are at a disadvantage when it comes to unspooling all their legacy media deals. They made plenty of these deals for hundreds of millions of dollars, and now they need to let that money go to get streaming revenue.

This is epitomized by Star Wars. I finally got an answer via Deadline to my eternal question, “Hey, how much did Disney pay to get the Star Wars films on Disney+ to TNT?” The answer? Marvel films. Apparently some Marvel films are leaving FX and FXX to head over to TNT, who already has the rights to some other Marvel films too. (Hat tip to an emailer for letting me know.) Here’s the key quote:

Given the makeup of its audience, of most interest to FX would likely be the Marvel and Star Wars films but there are no installments in either franchise’s current pipeline that have not been spoken for. (They are bound for TNT/TBS under the Disney deal with Turner which recently added some Marvel titles to its roster in exchange of Turner allowing Disney+ to offer at launch all Star Wars movies that the WarnerMedia networks had exclusive rights to.)

Every movie that matters to customers, and hence Disney, has the same constraints in one form or another.

Strengths and Weaknesses

That said, as soon as Disney began planning for their streaming future, they stopped selling their Pay 1 and Pay 2 rights. So, already, in 2019 we see a deluge of content coming for Disney. This is the second headline of the above table. Disney goes from zero films during its huge 2017 and 2018 to 7 films from this year. I could spin this as a positive or negative.

The weakness case is that the delta between the potential and the actual, especially at launch, may hurt Disney. When we think of Disney, we recall the upside cases. Like Black Panther, Guardians of the Galaxy and Incredibles 2. But most of those films are spoken for. If fans go to Disney+ expecting Black Panther, and it isn’t there, does that ruin the experience?

I don’t see this as a crippling end state, which leads to my positive case: if Disney can’t air them, well, neither can their competitors. Notably, HBO will have to claw back the best of the Warner Bros library, whose films are in the same type of deals, and then Universal will do a similar deal with itself. Meanwhile, none of these films are going to Netflix or Amazon. Further, none of the other competitors dominates the box office the way Disney does, so even if they do get all their films on their streaming channel, it won’t improve compared to Disney’s current situation.

However, we’ve been a bit focused on the recent catalogue. For one last little bit of fun, let’s look at the deep library catalogue.

Crazy Theory: The Return of the Vault

One of the oddities of the Disney announced films is that quite a few very important films are missing from the list. If we believe Disney  announced the most important films for the service—a fair assumption, but see next section if you have qualms with this—then we’re missing some films.

Take my Disney Princess Index as a measure of importance. When Disney+ launches, a few princesses aren’t joining the party. Specifically, 9 of the 14 Disney princesses won’t have their film on the new Disney service. Meanwhile, here’s a selection of other important Disney animated films that won’t make it on the service at launch:

IMAGE 7 - Missing from Disney+The simple explanation is this same as the constraint above. The Princess and the Frog, for example, is on Netflix. Brave, I believe, is on FreeForm. I don’t know where Aladdin or Beauty and the Beast are. Maybe they’re in…

…The vault.

Could Disney bring back “the vault” concept? For those who don’t know, this was the idea that, unlike other feature films, Disney animated films only came out on home video or DVD every few years for exclusive runs.

Now, Disney+ may not use that name explicitly. But there is a chance that Disney will never put their entire film catalogue on Disney+ at one time. They want to keep kids and families hooked, so the films will rotate in and out. And if Disney was really cynical, they’d say, “Hey, if you want Aladdin right now, you can buy it digitally on Disney Movies Anywhere.” I can’t say for sure this is Disney’s plan, but I’ll be honest, I can’t rule it out either. I think Disney financial wizards may have a plan to maximize revenue while still offering the greatest collection of Disney films to stream in one place.

Or, this could be a great marketing plan. Maybe Aladdin is coming to the service in January with a big (relatively) marketing push. Same thing with Beauty and the Beast and Toy Story 3 in February and March. And so on. I’m making those dates up out of thin air, but if I were setting a release schedule, it wouldn’t look too different. And Disney does know how to market.

Or they just can’t control the situation as I wrote about with Marvel films. Or my last caveat.

Caveat To This Theorizing

You know what they say about assumptions. The assumption undergirding this entire enterprise on films is that this list is accurate. And final. We know it will be for the Star Wars films (there aren’t any more available) and the Marvel films. Everything else, though, is a bit of guess work and subject to change. So we’ll see.

With that, we’re over our goal for word count. Check in tomorrow for a bit shorter piece on the TV side with a few more insights, and my biggest concern over Disney+, with some recommendations.

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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