Disney CEO can’t wait to go Solo with digital disruption
- Summary:
- Solo - A Star Wars Story is the latest hit, but for Disney CEO Bob Iger, there’s another solo push that he can’t wait to see.
With Solo - A Star Wars Story out the door in the U.S., attention is turning in the Magic Kingdom to what comes next, the answer to which is - a lot!
The next 18 months will see the release of a dozen sure-fire hits for the Walt Disney empire - Incredibles 2, Ant-Man and The Wasp, Ralph Breaks the Internet, Mary Poppins Returns, Captain Marvel, Dumbo, Avengers 4, Aladdin, Toy Story 4, The Lion King, Frozen 2, and Star Wars: Episode IX.
While those excite CEO Bob Iger, it’s to his plans for a digital direct-to-consumer Disney service in late 2019 that his attention is in large part focused. This is something that’s been brewing for a while as Disney seeks to shore up its empire from upstart intruders like Netflix and to build a platform offering of its own. If you can’t beat ‘em, disrupt them yourself!
The differentiator is simple, Iger argues - quality over quantity:
The deeper we delve into the possibilities of this platform, the more excited we are by its potential to drive value...our incomparable collection of strong brands recognized and respected the world over puts us in a great position to lead the way when it comes to building the direct relationships with consumers that will define the future of media. Our recent re-organization reflects our determination to effectively capitalize on a rapidly changing landscape, increasingly defined by transformative technology and evolving consumer expectations.
Iger points to three primary content divisions underpinning this digital push - Media Networks or television; sports in the form of ESPN+; and the Studio:
Our Studio and Media Networks are content engines for the entire company, and we're maximizing their value by combining the management of our direct-to-consumer distribution platforms, technology and international operations, to deliver the entertainment and sports content that people around the world want most, with far more choice, personalization and convenience than ever before
Still underway and awaiting regulatory approval is the acquisition of assets from 21st Century Fox, which will, says Iger, “plug into all three of those”:
We looked at creating essentially a global platform of distribution business that would include technology and would ultimately leverage the technologies that exist across the globe and across our current businesses, but then factor in the technologies that exist in the assets that we are acquiring.
It seemed to make sense that international become part of that part because as part of the acquisition there are two big platforms, Sky and Star, that are part of that. And so, if this acquisition happens, it seemed to make sense that the international assets and [what] I'll call the platform assets are in one business.
He adds:
There's just a lot of efficiencies in managing the way we take all this IP to customers around the world. It's our intention to create great user experience and in an efficient way, not only with our moving the content to people, but an effective way of monetizing it. It really dovetails with exactly why we're interested in these assets, which is to continue as a company to invest and then to create great products and experiences around the world, to invest in great technology, to make it more modern and more innovative in terms of how customers interface with it, and diversify the company internationally.
Sporting chance
That’s all to come. For now, attention is centered on the performance of EPSN+, a digital extension of the EPSN sports channel. Iger isn’t providing stats on take-up to date, other than to say “so far, so good’:
A number of people have signed up, obviously, for the trial and our conversion rates have been good so far. Most importantly, the technology is working, the user interface is considered good, the fan reaction has been quite strong. We're going to continue to improve it. There is always opportunity to get better, and that's what we'll do. But basically I give it a so far so good. I watched – not on a WiFi connection, but I watched the other day a live Yankee game basically while I was sitting in my car [and] the quality was fantastic.
There will be continued investment in fresh content around sports, says Iger, pointing to the acquisition of rights to UFC (Ultimate Fighting Championship) events for five years from 2019:
That's a start. We intend to continue to invest in buying product that is original, whether it's specific for the app, both live sports and non-live sports. We've also moved some products over there and put some library products over there, and we think that there is a lot of opportunity for us to continue to fuel that experience with product you don't get to see on the linear [TV] network.
To date, argues Iger, the marketing push behind ESPN+ has been “relatively modest” so as make sure it works before pushing for bigger take-up:
We have primarily resorted to using time and the marketing opportunity on the ESPN platforms, including the channels, the magazine, the websites, and the existing app. ESPN Digital is the most popular sports digital product out there. It dwarfs some of the competition, and that gave us ample opportunity to promote basically what is a new app experience. So the marketing costs are modest. There is some investment in additional programming prior to launch, but we made more investment with the announcement of UFC. That doesn't come until 2019, and we're going to continue to invest in product to make ESPN+ a real digital sports marketplace.
But its in late 2019 when all this digital ambition really takes off for Disney. That’s when it gets back more of its own output currently licensed out to rival Netflix to complement original content currently in the works:
We're producing right now content for it, original content that is Pixar-branded, Marvel-branded, Star Wars-branded and Disney-branded. In the Disney case, we're looking for quality over quantity. We're not looking for essentially massive amounts of content. We're looking for high-quality content utilizing those brands and the franchise and the characters that fall under those brands. Right now, I feel good about both.
My take
No doubt he does. I don’t imagine they’re quite so upbeat about all this at Netflix, where it’s more likely a case of, as Han Solo would say, ‘I’ve got a bad feeling about this...’.
This is a major digital platform build out that, as we’ve said before, has the potential to disrupt a market that was already being disrupted. One to watch as 2019 gets closer.