Analyst: Disney could shake up SVOD market

Starz, Netflix would be impacted by new entrant

Disney is poised to break into the subscription VOD market, if a new theory from Bernstein Research is to be believed.

An existing low-profile premium movie service called Disney Family Movies could be transformed into a competitor to Netflix or Amazon Prime, contends analyst Todd Juenger, particularly if the conglom exits its current output deal with Starz to bolster the property.

“Disney could transform this sleepy little excuse for a library service into a bold, disruptive, proprietary, Disney-branded premium SVOD service,” writes Juenger, who does not indicate any actual plans are afoot at the company to launch such a service.

DFM is currently available across a range of cable and telco providers but with a relatively modest supply of movies from Disney’s studio, presumably because the streaming rights to its best titles are tied up in its output deal with Starz, which doesn’t expire until 2015.

But Juenger believes Disney would be shrewd to funnel those titles upon the deal’s expiration to DFM. He projects that could drive more revenue into Disney’s coffers than the Starz deal–which he estimates to be worth $225 million–and also please the conglom’s pay-TV partners as long as the SVOD product is made available only to their subscribers via authentication.

Such an arrangement would have a dramatic impact on Starz, which would lose one of its key movie deals, and existing SVOD competitors like Netflix, which could find itself with yet another well-capitalized competitor.

Juenger estimates an invigorated DFM could reach as many as 12 million subscribers by 2020.