That’s the dollar amount Walt Disney is expected to get from its direct-to-consumer businesses this year, according to Macquarie Research. That will amount to an eye-opening 19% of total company revenues ($69.6 billion).
All this compares favorably to Netflix, which brought in total revenues of $20.1 billion for 2019. Give Disney an A+ for figuring this out -- perhaps more quickly than anyone would imagine, given the head start Netflix, Amazon, Roku and others quickly moved into the space.
How did we get here? For Disney, it came from compelling content, a major brand name and, of course, a great price point. At $12.99/month, consumers can get a strong package of three core services: Disney+, Hulu (on-demand) and ESPN+.
No, this isn’t everything. There is no live, linear TV networks/stations in this deal. The Hulu + Live TV option would give you that for another $55 dollars per month.
So you see why it’s important to have scale -- and why competitors are frantically looking to find it. This is why Viacom spent $340 million for Pluto TV last year, Fox Corp. bought Tubi for around $440 million in March and Comcast purchasing Xumo for $100 million in February.
Still, if you are WarnerMedia or NBCUniversal, you have a ways to go. Their premium platforms, HBO Max and Peacock TV, are still the new kids on the block.
They need what Disney has -- wide-ranging scale of many differentiated premium video products consumers believe they need to replace everything legacy pay TV systems provide --- on-demand, live/ linear TV, sports, niche programming and other products.
We should probably add one more: access to rent theatrical-intended premium movies -- something Universal and Disney are dabbling in, due to movie theater shutdowns. For instance, Disney's “Mulan” is now a $29.99 premium VOD rental starting September 4.
What’s the future mix? That’s the secret sauce everyone is working on. Perhaps many will add a broader mix of ad-supported (but not necessarily free) platforms for consumers to mull over.
NBCU is betting the ad-supported thing will be key for Peacock. For its part, Viacom is going with CBS All Access and will “supersize” the service, complete with a new brand name. To gain more scale, Viacom recently struck a carriage deal with another premium video platform -- Apple TV+ -- which is also looking for more premium streaming heft.
Hungry consumers continue to eat up all things CTV, OTT, movies/TV and everything in between. Expect more tasting and tinkering with these business recipes.