At a board retreat in Orlando, Florida, in 2006, a pair of senior Disney executives predicted a seismic shift in the media landscape — one fueled by consumers who would enjoy unprecedented access to content. Their plan? Amass strong enough entertainment brands and franchises to grab the attention of viewers awash in choices.
That insight, part of a “Disney 2015” presentation by its CFO at the time, Tom Staggs, and corporate strategist Kevin Mayer, was delivered a dozen years before Netflix briefly surpassed Disney as the world’s most valuable media company in 2018. It would inform an aggressive buying binge, in the mold of the Pixar Animation Studios deal of 2006, that would roll up some of the world’s most recognizable entertainment brands under the Disney banner — Marvel Entertainment, Lucasfilm and 21st Century Fox. These form the foundation of the coming Disney+ streaming service, which CEO Bob Iger will discuss in detail at an investor day Thursday on Disney’s manicured studio lot in Burbank, California.
Analysts say Disney’s library of blockbuster films and popular TV shows, bolstered by its recent acquisition of Fox’s film and television assets, give it a competitive advantage that should help attract subscribers — even at a time when established rivals, like Netflix and Amazon Prime Video, have gained a substantial head-start.
Disney and Fox together account for 47% of the top 100 films of all time, based on domestic box office. That’s more than double the nearest competitor, Warner Bros., with 20 hit movies. The combined Disney and Fox libraries also command the largest share of the 100 most popular TV shows, as ranked by IMDB.
Disney plans to mine its Pixar, Marvel and Star Wars franchises for original shows that will appear exclusively on the streaming service, including a live-action Star Wars TV series The Mandalorian, an animated series Monsters At Work, with Billy Crystal and John Goodman reprising their roles as Mike and Sully, and a series based on the Marvel archer character Hawkeye, starring Jeremy Renner.
“The amalgamation of Disney’s and Fox’s libraries will create an unparalleled combination of great, hard to recreate and memorable content,” said media analyst Michael Nathanson.
Nathanson predicts Disney+ will attract 7.1 million subscribers in its first year, growing to nearly 24 million by the end of fiscal 2022.
A question remains about whether a content company like Disney will be able to match Netflix’s technological prowess. The Los Gatos-based streaming service has been able to draw from its vast trove of user data to deliver recommendations that keep its 139 million global subscribers watching, month after month, and inform programming decisions.
Disney has stumbled on previous digital endeavors, such as DisneyLife, a U.K.-based streaming service that launched in 2015, charging £10 a month for access to some 400 movies, 4,000 TV episodes as well as songs and books. Despite a price drop, it has failed to catch on with subscribers, according to numerous published accounts.
The success of Disney+ is something Iger is staking his legacy on, describing it, during a recent investor call, as “our number one priority.”
That’s a major strategic shift for Disney, which had enabled the growth of Netflix through lucrative multi-year deals, such as the one in 2012 that gave the streaming service exclusive TV rights to new and catalog films, and another, the following year, that handed Netflix access to Marvel’s muscular superhero roster — with ABC Television Studio developing original series based on comic book characters Daredevil, Jessica Jones and Luke Cage.
Netflix became the de facto syndicator for a number of TV shows, noted Nathanson.
The inescapable toll of cord-cutting, fanned by popular services like Netflix, caused a re-calibration inside the Mouse House. Disney’s traditional cash cow, ESPN, has shed 13 million domestic subscribers from its peak in 20013, and Disney Channel also has lost millions of pay TV viewers.
Iger shifted course in 2017, announcing that Disney would pull its content from Netflix and launch its own service in 2019. That August, the company invested $1.58 billion to acquire a majority ownership of BAMTech, the MLB-founded video streaming technology that will power Disney+. That same year, in December, Disney announced its ground-breaking deal to acquire much of Fox, a move that would position Disney as the world’s preeminent entertainment company — and bulk up its library as it prepares to do battle with Netflix.
The $71.3 billion Fox deal, which closed in March, reunited the X-Men and Fantastic Four with the rest of the Marvel universe, added The Simpsons and Ice Age to Disney and Pixar’s animated roster, and brought James Cameron’s four sequels to the box-office blockbuster Avatar under the Disney banner. It also gave Disney a controlling interest in Hulu, a streaming service jointly owned with Comcast’s NBCUniversal and AT&T’s WarnerMedia, which has amassed 25 million subscribers.
Disney announced a sweeping corporate reorganization in March of 2018, to consolidate its streaming operations under the executive who’d overseen its major acquisitions, Kevin Mayer. Previously, efforts had been fragmented among the different business units, with the film and television groups pursuing different digital strategies, say former insiders.
“Depending on how aggressively Disney intends to invest, and their willingness to accept compressed profit margins, the company has a chance to become a meaningful competitor to Netflix and Amazon’s Prime Video,” wrote Brian Wieser, a long-time media analyst who now oversees business intelligence for GroupM, one of the world’s largest media buyers.
-Dawn Chmielewski; Forbes Staff
Apple Is Donating 9 Million Masks To Combat The Coronavirus
Topline: Apple will donate 9 million N95 protective masks to combat the coronavirus, Vice President Mike Pence said on Tuesday, making Apple one of several California tech companies pitching in as hospitals across the country report a shortage of protective gear.
- Pence thanked Apple for agreeing to donate 9 million N95 respirator masks to healthcare facilities across the country during a press briefing on Tuesday.
- Pence’s remarks come after Apple CEO Tim Cook tweeted over the weekend the company was “working to help source supplies for healthcare providers fighting COVID-19” and “donating millions of masks for health professionals in the US and Europe,” but did not offer more specifics.
- N95 respirators are masks that form a protective seal around a wearer’s mouth, filtering out at least 95% of particles in the air, according to the Centers for Disease Control, which makes them necessary to protect healthcare workers from being exposed to the disease from patients.
- Facebook has also said it is donating its stockpile of 720,000 masks purchased during the California wildfires last year, which degraded the air quality in the San Francisco Bay Area.
- Apple did not immediately respond to a request for comment from Forbes asking if all of the donated masks were stockpiled because of the wildfires or if the company got them from somewhere else.
Chief critic: Teddy Schleifer, a reporter at Recode, wrote that health systems shouldn’t rely on the generosity of big tech companies to make up for the failures of the federal government.
“But there is a risk in relying on corporate philanthropy—rather than the government—in solving this problem. For starters, it depends on the voluntary generosity of these companies to deal with an unprecedented emergency, an altruism that could vanish at any time,” he wrote.
Crucial quote: “And I spoke today, and the president spoke last week, with Tim Cook of Apple. And at this moment in time Apple went to their store houses and is donating 9 million N95 masks to healthcare facilities all across the country and to the national stockpile,” Pence said.
Key background: Apple is one of several California tech companies to give away N95 masks. In addition to Facebook, Salesforce, Tesla and IBM have also announced mask donations.
News peg: Doctors and nurses are sounding the alarm that they don’t have enough masks to protect healthcare workers. Not only does inadequate protective gear put important frontline health workers at risk, public health experts say, any situation endangering medical personnel may only further depletes the U.S. health system which already doesn’t have enough capacity to handle a surge in cases. State officials in New York and Illinois have criticized President Donald Trump for not stepping in to force companies to manufacture masks or allocate masks from private companies to ensure that states don’t outbid each other for the same supplies.
–Rachel Sandler, Forbes Staff, Breaking News
Video Games Are Being Played At Record Levels As The Coronavirus Keeps People Indoors
Topline: With school closures, mandatory work-from-home policies and lockdowns taking place in the U.S. as a result of the Covid-19 coronavirus pandemic, gaming has seen higher engagement, especially over this past weekend.
- Steam, the most popular digital PC gaming marketplace, reached new heights Sunday, drawing a record 20,313,451 concurrent users to the 16-year-old service, according to third-party database SteamDB.
- Counter-Strike: Global Offensive, released by Steam-owner Valve in 2012, seems to be the top beneficiary of the increased engagement, breaking it’s all-time peak on Sunday with 1,023,2290 concurrent players, topping its previous peak last month by a million, which itself beat the record set in April 2016.
- Like other esports, CS:GO has had to cancel events due to the virus, particularly the Intel Extreme Masters in Katowice earlier this month, though its peak viewership reached over a million, making it one of the most watched tournaments in the esports’ history.
- Activision Blizzard’s new free-to-play battle royale spinoff Call of Duty: Warzone, launched March 10 on PC, Xbox One and PlayStation 4, is also likely benefiting, drawing in a staggering 15 million in three days, besting the record 10 million in three days by last year’s battle royale sensation Apex Legends.
- These new heights follows similar effects of the virus on China and Italy: Telecom Italia’s CEO told Bloomberg it saw a 70% increase in traffic over its landline network, with Fortnite playing a significant part, while Chinese live-streaming service Douyu experienced increased viewership of the country’s most popular games, according to market analyst Niko Partners.
- While gaming was considered “recession proof” during the 2008 market crash, stocks aren’t immune to the current historic drops: software developers like Activision Blizzard are facing a 9% decrease in price year-to-date, while hardware companies that rely on Chinese manufacturing like Nintendo are seeing bigger drops of 24%.
What To Watch For: If these records keep rising as the closings and lockdowns continue. Arriving this week is Nintendo’s long-awaited Animal Crossing: New Horizons for the Switch console, a relaxing “life-simulator” that’s set to have a big day with many fans not-so-jokingly asking Nintendo to launch early.
Surprising Fact: Plague Inc., a game that tasks players in creating a virus that wipes out humanity, surged in popularity late January, becoming the top-paid game on the Chinese app store at one point, but the game has now been removed in China at the direction of the government.
Amazon Hoping To Hire 100,000 New Employees To Deal With Coronavirus Demand
Topline: Amazon announced Monday that it would be opening 100,000 new full-time and part-time positions to deal with increased buying demand as people practice social distancing during the Covid-19 coronavirus pandemic.
- The company will also increase pay by $2 in the U.S. from its current $15 an hour, £2 in the UK and €2 in Europe for those working in fulfillment centers, transportation services, stores or people making deliveries, amounting to a total of $350 million.
- Amazon last Friday shared that the increase in online commerce has unsurprisingly resulted in shortages for household essentials and delays in shipment times.
- Monday’s statement also noted that “We continue to consult with medical and health experts, and take all recommended precautions in our buildings and stores to keep people healthy. We’ve taken measures to promote social distancing in the workplace and taken on enhanced and frequent cleaning, to name just a few.”
- Last week, Amazon told all of its employees to consider working from home if they could, according to CNBC; for its fulfillment centers and delivery services, it also launched a $25 million relief fund that lets workers diagnosed with the coronavirus apply for grants equal to two weeks pay, as well as unlimited unpaid time off for all hourly employees until the end of March.
- Amazon currently employs 250,000 people at 110 fulfillment centers.
News Peg: According to Johns Hopkins, 181,200 people have been infected with the coronavirus, with 7,115 deaths reported. School closures, lockdowns and curfews have been put in place to promote social distancing, with the White House today recommending to avoid groups of more than 10 people.
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