Wednesday, March 07, 2018

Disney / ESPN Streaming Service

Disney plans to launch a streaming service to compete with Netflix sometime in 2019. Not much is known about what Disney plans to do.

Here's what I predict or suggest what Disney should offer.

First it will be a combined linear (live channel) and on-demand offering. This leverages Disney's existing portfolio of products. This means ESPN will have to play a large role. Second it will be kid and family friendly which means no content higher than PG-13. It is this second point that helps explain some of the recent changes at ESPN (but I'll get to that later).

The first part of the package would be the following 10 channels offered for just under $10 per month:

ABC Family
ABC News Now
Disney Channel
Disney Jr.
Disney XD
ESPN Classic

That should be appealing to many families and at about $1 per channel it fits most budgets especially for families who have cut the cord. And more importantly it helps stem the revenue bleeding from families cutting the cord which has been a major factor in why ESPN has been a recent drag on Disney stock.

But first ESPN has to be made "non-offensive" to middle America. "Mommy you voted for Donald Trump - does that mean you and daddy are racists?" "Daddy can you help me write a paper on my hero Colin Kaepernick?" Any non-on-the-field content that may embarrass parents or cause blood pressure to rise has to be eliminated or avoided. The first step was to get rid of John Skipper who resigned December 18, 2017 supposedly because he has a "substance addiction".

What if that "substance" addiction wasn't drugs or alcohol but instead "substantial" topics and people who hold "substantial" opinions? People like Jemele Hill or Keith Olbermann. I mean most friends and colleagues were shocked at the idea Skipper had a substance addiction in the common understanding of the term. But I bet most would agree that Skipper's loyalty to the "talent" was a habit he'd find hard to break.

Author James Miller seems to agree with this idea. Miller wrote that Disney CEO Bob Iger offered to have Jimmy Pitaro come over to "help" Skipper but was declined on the grounds that Skipper "thought the move would disrupt ESPN culture." Maybe that was the whole point? Now Jimmy Pitaro has been named President of ESPN and co-chair of Disney Media Networks. The pieces just fall into place.

The second part of the package would be the on-demand content of which Disney has a library that's hard to beat. You'd of course have all the classic Disney movies and TV content for the kids. Then you'd have all the Star Wars properties and Marvel superhero movies (except Deadpool because of the R-rating - let HBO or Netflix pay for the rights to those movies). On top of that you'd have the ESPN Classic library of documentaries and classic games plus all the recent and expanding 30 for 30 documentaries.

You could market the on-demand package separately for $5 per month or you could get the linear  channels and the on-demand for $12 per month. That's an attractive package. It not only competes against Netflix but in many cases complements Netflix. Most people who cut the cord have multiple video offering. It's not an either or situation

If you keep cable then you are already paying Disney top dollar. If you cut the  cord and you either have a family or like sports the $12 per month is not much to spend especially if you've just dropped a $120 cable package.

Anyway - this is one man's read of the situation.

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