Disney will mark its entry into the European streaming wars this week when it unveils its Disney+ service at a glitzy promotional event.
The entertainment giant is seeking to challenge the dominance of Netflix and Amazon’s Prime Video, and at the private event on Thursday will unveil a formidable arsenal of content. This includes the $100m Star Wars spin-off series The Mandalorian, Pixar hits such as Toy Story and family favourites such as Frozen 2 – content it hopes will be attractive enough to get consumers to fork out for yet another streaming service.
In a bid to entice sign-ups, Disney has cut its already competitive price by 17% to £49.99 for annual subscribers, which it will offer until the consumer launch in the UK and much of western Europe on 24 March. Disney+ is significantly cheaper than Netflix, which charges £7.99 a month for its most popular package, and Prime Video, which costs £79 a year.
With the unexpected announcement that chief executive Bob Iger – who has led Disney successfully for decades and is a Disney+ evangelist – is to step back and become chairman, the company needs to maintain its momentum with a successful European roll-out.
Disney is expected to get off to the same roaring start in Europe as its Mandalorian-fuelled launch in the US last year. The company hit 10 million sign-ups on day one and 26.5 million after three months– a number that Netflix took five years to reach.
But despite owning some of the most successful franchises in history – Marvel films, from Iron Man to Avengers: Endgame, have made $22.5bn (£17.5bn), Star Wars another $10bn – it will take time for Disney to build a library to challenge Netflix.
“In the short term, certainly the first few months of launch, Disney+ will do well in Europe,” says Jonathan Broughton, lead analyst at Media Business Insight. “Disney’s challenge will be to keep its impetus going. It has planned for a wave of high-profile content to land at launch, but it [will now be] a while until the next tranche. They don’t have that many Mandalorians ready to go, and consumers have a high demand for fresh, high-quality content.”
Disney’s launch numbers have been flattered by a US deal for customers of telecoms operator Verizon to get the service free for a year. And after its stellar start, growth has slowed significantly, with the total number of subscribers climbing to 28.6 million as of 3 February. The company is aiming for 60-90 million subscribers by 2024, when it expects to break even, while Netflix has more than 160 million globally with more than 12 million in the UK.
The world’s largest entertainment company, with a market value of $213bn, has the muscle to pose the sternest challenge to Netflix since it embarked on its streaming future more than a decade ago. Disney spends $24bn on its film and TV empire, with about $7.6bn of that on sports rights for ESPN. Spending on making original shows for Disney+, including Tom Hiddleston reprising his big-screen Marvel role in a spin-off series called Loki, will rise from $1bn to $2.5bn annually by 2024. Reed Hastings, Netflix’s chief executive, has said his company is set to raise its $15bn annual spending significantly to protect its position. Amazon spends about $7bn annually.
Disney also faces the problem of attempting to unpick some of the licensing deals it already has in place. For example, The Simpsons, which Disney took control of following its $71bn deal to buy Rupert Murdoch’s Fox last year, is on its US service, but first-run UK rights will remain with Sky, now owned by Comcast, for the foreseeable future. Disney’s movies are also licensed to Sky: that deal expires this year, and the two companies are expected to announce a non-exclusive deal for Disney+ to be available on Sky’s platform.
As the streaming market becomes crowded, many expect weary viewers will reach “peak TV”. Analysts believe customers will settle on paying for perhaps five main services, more if some of the streaming services offer the option of being bundled, as Netflix does with Sky.
“As more and more competition emerges, there is certainly subscription fatigue setting in,” says Broughton. “Is Disney+ likely to make that core ‘must-watch’ group, whatever that number of subscriptions ends up being? I would say, ultimately, yes, they will.”