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Disney Outlines Streaming Service, Will Launch in Late 2019

The composition of the Walt Disney Company’s streaming service became clearer on Tuesday as the entertainment giant walked the investment community through its rollout strategy for its Netflix challenger.

Bolstered by its acquisition of much of Fox’s film and television assets, as well as the end of several licensing deals, Disney CEO Bob Iger said he expects the service will be available at the end of 2019.

When it hits the market, the service will include upcoming theatrical releases such as a live-action remake of “Dumbo,” “Captain Marvel,” and the next Avengers sequel. There will also be several films that are made directly for the streaming service, such as a remake of “Lady and the Tramp” and the Anna Kendrick comedy “Noelle.” Original television series will draw on pre-existing Disney properties such as “Monsters Inc.” and “High School Musical.” The hope is that major Disney brands such as Pixar, Marvel, and Lucasfilm, as well as NatGeo, which the company is buying from Fox, will all contribute content to the service.

“Our first priority is going to be reaching our core Disney fan,” Iger said.

It’s a robust offering, but Iger noted that it will take the company time to build up its library of streamable movies and programming.

“We want to walk before we run when it comes to volume of content,” he said, later adding, “We have to put enough on to make sense from a price-to-value relationship perspective.”

To that end, Iger suggested that Disney’s streaming service might be a lower cost option to Netflix. He noted that the company’s pricing will reflect its “lower volume” of content. There will also be some notable omissions. Some of Disney’s biggest franchises, such as “Star Wars” movies released before next year, will not be available. They have been licensed to other distributors.

“The marketing will make clear that it’s not going to be on there,” said Iger. “But ‘Star Wars’ movies that come out in 2019 and later, you’ll find them there.”

Disney’s dive into the world of streaming comes at a time of great flux for the media business. Customers are cutting the cable cord, imperiling the retransmission fees that Disney reaps from ESPN, the Disney Channel, and other pay-TV brands. At the same time, domestic movie attendance is flat and companies such as Netflix continue to lure top talent like Ryan Murphy and Will Smith to their platform with lucrative deals. The hope is that the company can bring customers who have grown disenchanted with pricey cable bundles or the high cost of moviegoing back into the fold.

To that end, there will be other over-the-top ventures from the company. As part of the Fox deal, Disney will have a 60% stake in Hulu. Any R-rated films from its catalogue or from the Fox or Fox Searchlight library will likely appear on that service. Another streaming video on-demand service is an app from ESPN that launched last spring. Iger said the results in the initial months have been “encouraging.”

Creative decisions at Disney’s streaming service will be overseen by Ricky Strauss, a veteran marketing executive who got the post last month despite his lack of production experience.   Michael Paull will be responsible for the business and technology side of things.The content on the Disney branded service won’t be cheap. The shows and movies produced exclusively for the service come with hefty price tags. A live-action, 10-episode “Star Wars” series from Jon Favreau will cost roughly $100 million and an adaptation of the book “Timmy Failure” boasts a $45 million budget, according to a recent story in the New York Times. 

Looking ahead, Iger said he believes that many Fox franchises and labels will be complementary to Disney’s content. The Disney chief said he was particularly excited to buy back the rights to X-Men, Deadpool, and the Fantastic Four — Marvel brands that had been licensed to the studio. Moreover, Iger said Disney plans to invest in FX, NatGeo, and Fox Searchlight, giving them more resources to produce movies and shows.

“It’s hard to argue that Searchlight needs any help from anyone,” Iger told analysts. The indie label dominated last year’s Oscars, winning best picture for “The Shape of Water” and capturing top acting prizes for “Three Billboards Outside Ebbing, Missouri.”

Disney’s most recent quarterly earnings fell short of Wall Street’s expectations. Profits hit $1.87 per share and revenues topped out at $15.23 billion. Analysts had projected earnings of $1.95 per share on revenues of $15.34 billion.

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