On Thursday, The Walt Disney Company will host its Investor Day for 2020, and we are expecting a ton of groundbreaking news about the future of Disney+. As someone who covers Disney and its businesses non-stop, I have some questions for the company that I hope will be answered on Investor Day.
What’s the international streaming strategy?
Back when Bob Iger was CEO of Disney, there were plans to take Hulu internationally. Now with CEO Bob Chapek at the helm, they have no plans to take Hulu internationally. Disney is opting to use the Star branding that they acquired in the 21st Century Fox deal for the overseas markets. It seems like the service may even be called Disney+ Star in some markets and would feature everything Disney+ offers plus content from Disney-owned vessels like ABC, FX, Freeform, Searchlight, and 20th Century Studios.
So, on Thursday I hope Disney clarifies their plans for their international streaming strategy. Also, I want to hear a good reason why Hulu wouldn’t work overseas? I find it borderline insane that Disney paid $71.3 billion for 21st Century Fox with one of the main prizes being a controlling stake in Hulu, to just not use Hulu to its fullest potential.
Hopefully, Chapek and the other speakers at the presentation give us good reasons for why Star is their choice and why it will work better internationally than the already-established Hulu.
What is going on with Hulu? (Also, if you combine Hulu with Disney+ where was the true value of the Fox deal?)
Now let’s get more into Hulu. Back when I was covering the 21st Century Fox deal I constantly said that one of Disney’s main reasons for buying 21st Century Fox had to be the controlling stake in Hulu. Disney was entering the streaming wars and they were going to need more than one service. Now is Disney deciding that multiple streaming services is too much when you can just charge a ton of money for one over-the-top streaming service that offers the best of Disney+, Hulu, and ESPN+?
That may be Disney’s thinking. I think they were blown away by the positive results of Disney+ so far, and maybe they are realizing that they don’t need Hulu. Hulu was well-positioned as the adult Disney streaming service. Now some rumors are saying we could see the combining of Disney+ and Hulu. This move would give Hulu an identity but it would be within Disney+.
Disney+ utilizing Hulu’s library would make the service have a vast range of content outside of the core Disney brands. I guess at the end of the day Disney doesn’t want to pay Comcast billions for their stake in Hulu when they can just combine the service with their already mega-popular service?
Either way, we need a clear answer from Disney execs on what’s the current value of Hulu to Disney. Especially on the domestic front if Hulu is never going to expand internationally. What good does Hulu serve domestically especially when licensing agreements run out and Paramout+, Discovery+, HBO Max, and Peacock come to collect their content.
Hulu seems like a red-headed stepchild within Disney right now and without a clear direction for the service things will only get worse. Also if you cannibalize Hulu into Disney+ was it worth the number of billions you paid for it?
Will Disney just merge Hulu and ESPN+ into Disney+?
To piggyback off the previous question. With no clear direction for Hulu and with ESPN+ doing relatively well. I think Disney needs to answer the big question. Why have three streaming services when you can have one streaming service and you can charge more per month? A recent article from Financial Times stated that Bob Iger and Kevin Mayer were debating putting more of ESPN’s live sports content on ESPN+ by 2022. There is nothing stopping the Chapek regime from doing that.
Although you’d probably lose a lot of value in Hulu, as I mentioned in the previous question. It would help Disney+ knock off the stigma that it is a streaming service just for kids and families. Hulu’s content library would be impressive for Disney+ and add in live sports and you may have the first true threat to Netflix during the streaming wars in terms of subscribers and ARPU (average revenue per user).
If Disney answers this question this could make the inevitable price hike not as bad for the consumer.
What’s your film distribution plan for 2021?
WarnerMedia CEO Jason Kilar walked into the room and dropped the mic. Although the move has thrilled some fans and investors it did create quite the ruckus within Hollywood circles. Internally within Warner Bros., some thought their 2021 slate was weak and that they’d rather sacrifice it to streaming to boost the fledgling HBO Max than have it perform badly at the box office.
I can’t imagine Disney nor CEO Bob Chapek rocking the boat with this same-day streaming model. It could happen, it very well could but… Disney LOVES theaters. They dominate them even more than Warner Bros. You can’t fund the Disney blockbusters just on streaming revenue. I do think Disney is going to experiment though. I have another article on this topic coming soon but I believe Disney’s 2021 slate will feature a mix of direct-to-Disney+, later in the year theatrical releases, and ugh even Premier Access.
Disney is expected to announce that titles like Cruella, Tom Hanks’ Pinocchio, and Peter Pan & Wendy would be heading to Disney+. We will probably see the company announce more titles being rerouted to Disney+.
I think the biggest decision for Disney’s distribution strategy is Black Widow from Marvel Studios. A film in a pre-COVID world that would easily near $1 billion at the box office. If Disney is willing to sacrifice a Marvel film to streaming or Premier Access it pretty much seals the deal that no Disney film is safe from potentially being moved out of theaters to Disney+ or Premier Access.
Disney Investor Day has a lot of questions to answer but none may be as big as this one. What Disney decides to do with its distribution model in 2021 could change the theatrical and streaming landscape forever.
Do you have an updated subscriber goal for Disney+? Do you have a new number on the amount of money you are willing to spend on content for your services?
This question should get answered relatively quickly on Disney Investor Day but still, it begs the question. Disney’s original streaming goal was to have Disney+ reach 60–90 million subscribers by 2024. The service currently has 73 million subscribers and it’s 2020.
Also, now with Disney+’s successful rollout in Latin America, it is expected that Disney will announce that the service itself is near the 100 million subscriber mark. It took Netflix seven years after starting the streaming service to reach that mark. If Disney does it in under two years that will for sure turn some heads. If that number ends up being correct Disney will have to update its projections for how many subscribers they expect by 2024.
Analysts have raised their projections to 158 million subscribers for Disney+ by 2025. For clarity purposes, Netflix, the worldwide leader in streaming is inching towards 200 million subscribers as they currently have 195 million subscribers. If Disney+ is able to make up this kind of ground this quick. Nothing will stop them.
That leads me to my second question as Disney+’s continued success will rely on more original content which means spending more on original content. Hopefully, Disney gives a clear number of how much they intend to spend on Disney+ in order to keep the subscribers they have gained. My prediction is that they will announce they will spend more than $2.5 billion on original content for Disney+. I’m expecting the number to be quite large.
So, there you have it those are my pressing questions for Disney’s Investor Day. I’m also curious from a content standpoint what projects get announced for Disney+ in order to generate even more buzz for the service. But from a pure business standpoint, these questions are things to watch for during Disney’s four-hour presentation.
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Zach Perilstein is the Editor-in-Chief of the Boardwalk Times
