Disney will roll into the subscription VOD wars with a smaller content selection than rivals — with a strategy of playing to quality, not quantity.
Disney+, the Mouse House’s new SVOD entry launching in the U.S. this November at $6.99 monthly, will cost nearly half of Netflix’s standard HD plan. But in its first year, Disney+ will have less than one-fifth of the selections on Netflix in the U.S., according to a study by research firm Ampere Analysis.
In the first year of launch, Disney+ will include 7,500 episodes of current and past TV shows and 500 movies, according to Disney. That represents just 16% of Netflix’s U.S. catalog of 47,000 TV episodes and 12.5% of the Netflix movie library of 4,000 titles, Ampere Analysis estimates.
In addition, Disney+ will have a lighter TV lineup than Hulu, Amazon Prime Video and CBS All Access, as well as fewer movies than Prime Video — which includes more than 12,000 titles — Hulu, Starz Play, and HBO Go, according to Ampere’s study. (See charts below.)
First of all, it’s no surprise that Disney+ won’t have a title count comparable to other SVOD players out of the gate. More important, raw numbers aren’t everything: They don’t reflect the total value or appeal of a subscription service.
Here’s a critical point: Disney’s top content beats both Netflix and Amazon in consumer perceptions of quality, according to Ampere Analysis. The U.K.-based firm compared the top 100 original-labeled titles (movies and TV seasons) currently available across top U.S. SVOD platforms. The Ampere Rating grades content on a scale of 1-100 (with 100 being the best) based on a proprietary algorithm that assesses user opinion of individual titles.
What Ampere’s analysis found is that the existing U.S. catalog of Disney content ranks above Amazon and Netflix, trailing only HBO (see chart below).
“Every Disney title will need to guarantee an audience, but with the entirety of Disney and Fox’s library to choose from, that’s very achievable,” said Richard Cooper, research director at Ampere Analysis.
Notwithstanding its relatively small title count, the Disney+ direct-to-consumer service will pack a huge punch with high-profile, big-name movies and shows. Those include the Marvel and Star Wars franchises, classic Disney and Pixar films, Fox titles including 30 seasons of “The Simpsons,” and original films and series, including Star Wars-set show “The Mandalorian” from Jon Favreau. Read more about the Disney+ lineup here: Disney+ Lineup: All the Shows and Movies Confirmed for Streaming Service.
Note, too, that Disney is winding down its licensing deal with Netflix, which previously had an exclusive SVOD window in the U.S. and Canada for Disney movies. Starting with 2019 releases, all Mouse House titles will be available to stream only on Disney+; those include “Captain Marvel,” “Toy Story 4,” “Avengers: Endgame,” “Frozen II,” the live-action remakes of “Aladdin” and “The Lion King,” and “Star Wars: The Rise of Skywalker” (Episode IX).
And Disney is prepared to invest heavily in Disney+, although not on the order of Netflix (which analysts project will have a $15 billion total content spend in 2019). For Disney’s fiscal year 2020 (which ends in the September quarter of next year), the company expects to spend $1 billion in cash on original programming for Disney+, rising to to around $2.5 billion by 2024, CFO Christine McCarthy told analysts at the Disney investor day earlier this month.
By fiscal year 2024, the company projects that Disney+ will encompass over 120 recent movie releases and more than 500 library films; over 10,000 TV episodes; and more than 50 original series and 10 original films and specials.
Both in the near and long term, Disney is well positioned to be a significant SVOD player, according to Dallas Lawrence, chief brand officer at ad-tech vendor OpenX. “If content is king, Disney owns the castle,” he said, adding that the media conglomerate operates an “unrivaled content factory of beloved movie franchises and television shows,” including those from Star Wars, Marvel and Pixar.
Disney+ has plenty of room to gain share of consumer SVOD spending — it’s not a zero-sum game. On a related note, as consumers increasingly cut the cord on pay TV in favor of OTT services, Netflix could even benefit from the entry of Disney+, WarnerMedia, Apple TV+ and others.
One data point here: A recent survey commissioned by OpenX found that American consumers who use over-the-top video services said they’re willing to pay upwards of $100 per month on average for self-made bundles of subscriptions. Of course, what people say and what they do can be very different. In any case, at $6.99 per month, Disney+ will be an attractive option, even if Disney later hikes the price a bit. The survey was conducted online by Harris Poll from Feb. 13-March 6, 2019, among 2,002 U.S. consumers 18 or older who reported using at least one OTT service.
Disney has really aggressive targets — McCarthy’s model forecast 60 million-90 million Disney+ subscribers by end of FY 2024, two-thirds of those outside the U.S. It’s clear Disney has the content assets, powerful brands, financial wherewithal and the addressable market to make a big run at SVOD. The key question is how quickly it can ramp Disney+ into a sustainable business.
For reference, per Ampere Analysis, here’s how the number of Disney+ selections in the first year will stack up against other streaming platforms:
And here is Ampere Analysis’ comparison of the top 100 movie titles available on SVOD services: