{"id":26430,"date":"2017-11-15T22:58:28","date_gmt":"2017-11-16T03:58:28","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/a-whole-new-world-the-digital-evolution-of-disney\/"},"modified":"2017-11-15T22:59:51","modified_gmt":"2017-11-16T03:59:51","slug":"a-whole-new-world-the-digital-evolution-of-disney","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/a-whole-new-world-the-digital-evolution-of-disney\/","title":{"rendered":"A Whole New World: The Digital Evolution of Disney"},"content":{"rendered":"

\u201cThings Will Look Better in the Morning\u201d \u2013 Bagheera, The Jungle Book<\/strong><\/p>\n

With the rise of digital media, for most consumers, the days of buying DVDs and CDs is in the past. Digitization of the distribution of media content to consumers has been redefined by over the top services (\u201cOTTs\u201d), most notably, Netflix, boasts a 64% OTT market share, a user base of 120 million and accounting for 35% of peak period downstream traffic in the US. [2] Traditional media content producers have been forced to adapt the way in which they supply their end customers with content.\u00a0 Facing the new reality of either partnering with the 800-pound gorilla, Netflix, or creating exclusive platforms in order to compete.\u00a0 In 2012, Disney entered into an agreement with Netflix to bring all of the studio\u2019s films exclusively to Netflix, including Disney\u2019s live-action films and Pixar\u2019s franchises. [3] The new partnership served as a reliable cash stream for Disney, bringing in, by Analyst estimates, approximately $325 million for the right to stream its content. [1]<\/p>\n

\u201cSometimes the Right Path is Not the Easiest One\u201d \u2013 Grandmother Willow, Pocahontas<\/strong><\/p>\n

Despite having partnered with Netflix to stream its content through their services, Disney experimented with different proprietary OTT offerings, including internally developing an application called DisneyLife. The app was released in November 2015 on a limited basis in the UK, offering old Disney movies and TV series.\u00a0 The proprietary offering was largely a failure and was never released outside of the UK. [1]<\/p>\n

In June, 2017, Disney\u2019s BoD assembled in Walt Disney World to discuss the ways in which technology was disrupting the company\u2019s business lines and how it was going to respond.\u00a0 The most alarming takeaway from this summit was that cord cutting was occurring at a much faster rate than anticipated, with live streaming for youth programming massively under-performing, while Netflix experienced rapid growth. [1]<\/p>\n

In August 2017, Disney made the decision to double down on its streaming efforts, announcing that it would be acquiring a 75% stake in BAMTech, the streaming-video company created by MLB, for a total investment of around $2.6 billion. In addition, Disney introduced two new subscription streaming services, both built by BamTech \u2013 one focused on sports programming to be offered through the ESPN app (Spring 2018 launch) and another featuring movies and television shows (2019 launch). [1] In addition to the decision to launch its own subscription streaming services, Disney announced that it is developing a series of original television shows to be released through its application.<\/p>\n

Given that Disney has historically utilized a paid subscription model through its cable provider partnerships, it would seem that the leap for consumers paying for a discrete offering could be reduced compared to other content providers.\u00a0 Disney has experimented with this approach for ESPN, which has experienced considerable pressure in user subscriptions, falling from 99 million subscribers in 2013 to 90 million subscribers in 2016. [4] Disney offered consumers the ability to subscribe to \u201cskinny bundles\u201d of ESPN channels priced at $40-50 per month, which, while early, has been well-received by consumers.\u00a0 Further, as Disney thought about ways in which to reach a younger audience, it established a partnership with Snapchat in 2015 to create temporary video stories. [5]<\/p>\n

\u201cReach for the Sky\u201d \u2013 Woody, Toy Story<\/strong><\/p>\n

While I think that Disney has taken positive steps toward reducing its vulnerability to the cord cutting trend, I am concerned about its ability to create relevant content to compete with the power houses, including Netflix, Amazon, Hulu, HBO etc.\u00a0 I would suggest either 1) acquiring or partnering with a popular OTT in order to bundle the offerings, 2) continuing to increase relevance by continuing to acquire studios similar to the Marvel and Lucas Film acquisitions or 3) go all in on original television content to establish shows with considerable buzz as a number of competitors have done successfully.<\/p>\n

\u201cIf You Can Dream It, You Can Do It\u201d \u2013 Walt Disney<\/strong><\/p>\n

    \n
  1. Should Disney pursue a model of becoming a scaled content owner with intellectual property exclusive to the platform to its own platform (a la Game of Thrones \/ HBO or Stranger Things \/ Netflix)? What are the pros and cons?<\/li>\n
  2. In 2015, the rumor mill was active with suspicion that Disney would acquire Netflix. How do you view the pros and cons of growing an OTT platform organically vs. through acquisition?\u00a0 What would you have done?<\/li>\n<\/ol>\n

     <\/p>\n

    (Word Count 774 words)<\/p>\n

    [1] Koblin, Brooks. 2017. “Disney\u2019S Big Bet On Streaming Relies On Little-Known Tech Company”.\u00a0Nytimes.Com<\/i>. https:\/\/www.nytimes.com\/2017\/10\/08\/business\/media\/bamtech-disney-streaming.html.\u00a0[Accessed 15 Nov. 2017].<\/span><\/p>\n

    [2] Facts, Netflix. 2017. “Topic: Netflix”.\u00a0Www.Statista.Com<\/i>. https:\/\/www.statista.com\/topics\/842\/netflix.\u00a0[Accessed 15 Nov. 2017].<\/p>\n

    [3] Disney\u2019S Streaming Service Has Won, And It Hasn\u2019T Even Launched Yet”. 2017.\u00a0The Verge<\/i>. https:\/\/www.theverge.com\/2017\/11\/11\/16637732\/disney-star-wars-marvel-pixar-streaming-service-netflix.\u00a0[Accessed 15 Nov. 2017].<\/p>\n

    [4] Why Disney Still Believes ESPN Is On A Winning Path – Market Realist”. 2017.\u00a0Marketrealist.Com<\/i>. http:\/\/marketrealist.com\/2017\/05\/why-disney-still-believes-espn-is-on-a-winning-path\/.\u00a0[Accessed 15 Nov. 2017].<\/p>\n

    [5] ESPN Launches A New Version Of ‘Sportscenter’ To Snapchat”. 2017.\u00a0Fortune<\/i>. http:\/\/fortune.com\/2017\/11\/13\/espn-sportscenter-snapchat\/?iid=recirc_f500profile-zone1. [Accessed 15 Nov. 2017].<\/p>\n","protected":false},"excerpt":{"rendered":"

    Facing an exodus of subscribers and a decline in ratings for its sports programming, Disney has been forced to re-think its content distribution model. 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