During last weeks quarterly results investor call, Disney CEO Bob Iger announced that they would be releasing a special bundle of Disney+, Hulu and ESPN+ for $12.99.
This new bundle offers all of Disney’s streaming platforms in an attractive low price, which will increase the amount of people viewing their content. Making the idea of cord cutting even more appealing, however, this new bundle will have some disadvantages for Disney with regards to its traditional television business, since Disney is negotiating new carriage deals with cable and satellite providers for its range of channels such as National Geographic, FX, ABC, Freeform and the Disney Channel.
As the audience changes its viewing habits, with streaming on demand becoming more popular, this is going to cut into Disney’s way of getting money from the cable companies.
“The rollout will affect pay TV negotiations. How could it not? “Nothing will be negotiated without the cloud of Disney+ hanging over meeting rooms.”
Said analyst Jimmy Schaeffler of the Carmel Group.
It’s expected that traditional TV viewing will increase by 14% over the next 5 years, but Disney’s streaming income will almost match traditional media income by 2024.
“The perverse outcome is that these competing services and bundles will encourage more cord-cutting. Fewer cable subscribers means lower retransmission rates.”
Said Michael Pachter of Wedbush.
“It definitely strikes me as a risk. The new bundle plus Hulu Live TV can encourage cord-cutting and hurt Disney while it negotiates.”
Said Steven Birenberg of Northlake Capital Management.
However, while the new bundle could impact Disney’s traditional business, the main place Disney is looking to pull customers from is Netflix. As Disney is expecting Disney+ to have over 30 million subscribers by 2024.
“Will Disney+, ESPN+ and Hulu hurt Netflix and its ilk? Yes, it will — significantly. The folks at Netflix, and their shareholders, should be very worried. Their lives are about to change.”
Said Jimmy Schaeffler.
This chart from Hollywood Reporter, show how Disney is going to eat away at the streaming market share but also show how the Direct To Consumer & International division (which includes Hulu, Disney+ and ESPN+) is expected to become one of biggest earners within the Walt Disney Company.
While there is lots of talk about “Disney Vs Netflix”, Netflix is still predicted to be a major player in the streaming business in 5 years time, however more competition will mean they have less market share, but will still be the biggest player in the game.
Do you think the new Disney streaming bundle will hurt Disney’s traditional TV business?