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Disney faces 'balancing act' in offering quality content for DTC, legacy pay TV

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Disney faces 'balancing act' in offering quality content for DTC, legacy pay TV

Walt Disney Co. Chairman and CEO Bob Iger spent considerable time on the company's earnings call discussing the upcoming Disney + streaming service, but he also addressed Disney's plan for continuing to operate within the legacy pay TV ecosystem.

Iger told analysts on the Aug. 6 call that the pivot to the direct-to-consumer business is designed to address the opportunities in that space and the challenges with traditional affiliates. He said Disney faces its "own balancing act" in trying to have enough quality content for its push into the DTC arena, while also continuing to succeed with multichannel video programming distributors.

"Obviously, what we also are doing is setting ourselves up in a way that we can be resilient, probably more resilient than any of our competitors, should the traditional side erode so significantly that it is not as viable as it has been as a business," Iger said. "That will enable us to pivot pretty quickly by moving even more product from the traditional channels over to the nontraditional channels."

Iger noted that the windowing strategy may work in reverse in the future. For example, content premiering on Disney's Hulu LLC streaming service might have a second run on linear channels.

"We're going to look at a variety of different opportunities and just make sure that there's enough content flowing in both directions for the businesses to be successful," he said.

Iger said Disney is currently negotiating with a number of MVPDs to extend carriage deals. "These remain important deals to us and important businesses to us, as well," he said.

One example is Disney's ongoing carriage discussions with DISH Network Corp. and Charter Communications Inc. for content offerings that include the ACC Network, a service presenting sports coverage from the Atlantic Coast Conference, launching later in August.

When Disney + launches Nov. 12 it will be available in a $12.99 monthly bundle along with streaming services ESPN+ and Hulu.

Hulu now has a combined 28 million subscription video-on-demand and live TV subscribers. The Hulu live service grew faster than any of its virtual provider rivals in the quarter, Disney CFO Christine McCarthy said on the call, though she did not provide specific subscriber numbers.