Disney unveiled its new streaming service last week, and the investment community has studied the promised offerings and pricing strategy, in particular with its impact on European broadcasting.
Disney+ is set to launch on November 12th in the US with a Western Europe roll out planned for Q2 2020. The basic package price will be $6.99/month, in line with consensus expectations and below the basic Netflix package at $9. By 2024 the group aims to reach 60 million – 90 million subscribers and expects one third of those subs to come from the US and in the mid-term.
Disney+ is planned to be profitable by 2024 with most of the losses expected in the next two years. Disney suggested it could lose up to $150 million ($100 million studios and $50 million in the network) of licensing revenues in FY19 due to the termination of some of its contracts as it launches Disney+.
Disney+ is planned to be anchored by Disney Studio, Pixar, Marvel, Lucasfilm and National Geographic content. It will also feature an array of exclusive original series and movies – including a live action Star Wars series, and multiple live action Marvel series. Disney’s other video platforms, for instance Hulu and ESPN+, will remain independent.
RTL, according to equity advisers at investment bank Exane/BNPP, is the only pan-European broadcaster whose online VoD pricing is currently public. RTL charges €4.99 per month for its bundle (from €2.99 previously).
For comparison, Netflix charges €7.99 per month for its basic package across Europe, in line with Amazon’s subscription price. Netflix has now announced a price rise for subscribers in Germany, Austria, Switzerland and Lichtenstein with immediate effect (to €12, from €8 for basic tier). “We expect Netflix to raise prices across Europe to the same level,” says the bank.
The launch of Disney+ will feature an elaborate marketing campaign paired with key events around new movies. Disney aims to have reached 95 per cent awareness at the Disney+ launch among its target group. To give some context Apple’s SVoD app will be launched in 100+ countries in the autumn.
As to promised rival services (to Netflix, Amazon Studios and now Disney) the bank’s report says:
“RTL has announced €350 million investment in its SVoD platform over the next three years, of which €300 million is dedicated to new and exclusive content. ProSieben will invest c€100 million pa over the coming four years jointly with Discovery. The investment will be spread across content, tech and other costs. ITV has guided for incremental SVoD investment of £25 million in FY19 and £40 million in FY20, of which most dedicated to content. The size of the investment is set to decline thereafter. France TV, TF1 and M6 are each expected to invest €15m in Salto,” adds the bank.