Disney+ has a grand strategic logic that, if executed smartly, should pay off for decades to come
DISNEY DID not need to launch a digital-video service to remain one of the most profitable media firms on earth. In a busy marketplace for subscription video-on-demand , top content licences are at a premium—and no content is more valuable than Disney’s. In 2019 the company is probably going to be behind each of the eight highest-grossing films of the year. The previous record for such dominance, set in 2016, saw one studio claim the top five spots.
The shift to Disney+ is expensive up front in several obvious ways. First, the company bought BAMTech Media, a leader in digital-video streaming, for roughly $3bn. Shortly thereafter, Disney spent another $85bn buying 21st Century Fox in order to expand its store of content and intellectual property . In the coming years, Disney will spend billions more on new original series and films for its service. It will also forgo about $4.
Disney then announced it would also provide a three-year offer that would cost less than $4 per month. A few weeks later, Disney formed a partnership with Verizon, the largest wireless provider in America, in which Disney+ would be given free to 17m-18m of its subscribers for at least a year . Several other discounts and bundling deals exist. More still are likely to follow.
But more important than short-term tactics is Disney’s long-term ambition. Behind the low price, hefty investment and considerable risk of Disney+ is a much greater prize: data and direct customer relationships. For decades, the Walt Disney Company has thrived because of the interconnection and cross-monetisation of each of its divisions.
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