Falcon Media House : The significance of Disney’s direct-to-consumer streaming move

24 August 2017

Disney's decision to divorce from Netflix from 2019 onwards, and to create its own streaming services, has created a big stir amongst the industry and led to many headlines around the globe from commenters. It's understandable given its recognition as a global brand, its importance as a rights holder (it owns ESPN of course) and its size in terms of value (market cap estimated at $150 billion), not to mention how many people it employs; estimated at 195,000. What's more, it raises some important and pressing questions for the creative, media and tech industries.

A renewed focus on creating original content

As we've seen from the likes of Netflix, HBO, Amazon and Hulu, the major battleground for enticing new customers, and keeping them, centers on the quality of original content such as Game of Thrones (HBO) or Orange is The New Black (Netflix). Facebook's recent launch of Watch, its streaming service with an initial focus on cooking and lifestyle content, is the media giant's first move in offering its billions of users the chance to watch original programming. Notably the chosen themes are not commonly available on other major streaming services as it tries to gain traction in other interest areas. The battle is going to heat up, with an emphasis on creating the most popular and future proof content that sustains the enthusiasm and loyalty of large audiences over time.

Floodgates will open for direct to consumer offerings

Just a couple of days after Disney's revelation, Fox media announced that they too would be 'open minded' about offering their own direct to consumer service, CBS also got in on the act with news of their plans to launch a new sports streaming service. In what is already a crowded market with Amazon, Youtube, Netflix and Hulu already established players, analysts predict that more direct to consumer OTT services will join the industry disrupters. As the technology infrastructures improve in emerging markets, and as consumer demand for watching anytime, anywhere increases, new global services will launch accommodating every niche and special interest.

Fragmentation and a potential return to bundling?

An explosion of OTT services may result in a more fragmented consumer offering. This would likely create greater choice for the consumer, and more competitively priced offerings as each service fights for its place in the hearts and minds of viewers. The outcome could however be a return to bundling and a pay TV model. Looking further ahead, it may also lead to a new wave of mergers and acquisitions as the number of different services becomes too many for the consumer, and the market, reaching a tipping point and forcing businesses to join forces with other complimentary services to stay afloat.

The increasing number of cord cutters shows little sign of slowing down anytime soon, whilst the amount of subscribers flocking to OTT services continues to gain momentum. Seen in this context Disney's news is highly significant, whilst not unique in its strategic approach or ambition. As another US icon, the legend Bob Dylan once famously wrote: 'The times they are a changin'.'