Disney and the Future of TV

Author

Michael Beach
April 25, 2019

Smart take (as always) from Stratechery on Disney+ and the future of TV.

Quote from Ben Thompson — Author/Founder @ Stratechery:“This is why I have argued that the traditional cable bundle will slowly become the de facto sports bundle; I would add news as well. This is the exact bet that Rupert Murdoch made with Fox; remember that Disney didn’t buy the entire company: Murdoch kept the Fox Broadcasting Company, Fox Television Stations, Fox News Group, and the Fox Sports Media Group. What these assets have in common is that they are perfectly aligned with the traditional TV model: news and sports are best live and drive both advertising and affiliate fees.”

Reasons that sports are unique:
1) People will pay more for access to sports
2) Best consumed live
3) Natural breaks in the action are ideal for advertising

The future of TV by content type and leader (w/ business model):
1) Stories & Entertainment — Netflix (subscription)
2) Brands & Family — Disney (subscription + Disney flywheel)
3) News & Sports — Disney, Fox, and Turner (advertising & affiliate fees)
4) Information & Education — YouTube (advertising)
5) Niche & Left Behind — HBO, CBS, Showtime, etc. (subscription, ads, and content sales)

Key details for Disney+ at launch:
1) $6.99/month ($69.99 annually w/ discount)
2) Advertising free (for now)
3) 500 movies (100 recent releases; 400 library titles)
4) 7,500 episodes of current shows
5) 60–90M subscribers by 2024
6) Profitable by 2024

Disney+ ≠ Netflix killer: There is enough room for both and each offers more value than their low monthly costs (< $16/month). A large share of Disney+ subscribers will also subscribe to Netflix and vice versa.

Interesting idea: Disney+ could be packaged with Hulu (ad-supported) for ≈ $15/month or roughly the price of Netflix or HBO Now.

Disney+ subscriber estimates by year (YoY growth) according to JPMorgan Chase:
1) 2019–0
2) 2020P — 8M
3) 2021P — 18M (↑ 125%)
4) 2022P — 30M (↑ 67%)
5) 2023P — 45M (↑ 50%)
6) 2024P — 60M (↑ 33%)

Who owns everything in media today?

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