Disney appeared to drop a bomb on Netflix this week by announcing a $13-per-month bundle for all its streaming services. When it launches on November 12, the package will include Disney+, Hulu, and ESPN+, all for the same price as Netflix’s most popular plan. (Disney+ will cost $7 per month on its own, while Hulu and ESPN+ will be priced at $6 per month and $5 per month respectively if purchased separately.)
Reporters and analysts quickly cast the Disney+ bundle as an assault on Netflix, which makes sense on some level. No two companies quite capture the clash between old and new media like Disney versus Netflix, and both companies will be competing for precious time and money in the age of cord-cutting.
Lost in the rivalry narrative, however, is that Disney+ and Netflix will have little in common. From pricing and packaging to advertising and the content itself, the two companies are taking opposite approaches to almost every aspect of streaming video.
By design, each of Disney’s streaming services targets a separate audience, or at least discrete tastes. Disney+ focuses on hit franchises with family appeal, such as the Star Wars and Marvel franchises; Hulu is more for mature audiences, with series like The Handmaid’s Tale; and ESPN+ is for diehard sports fans. It’s reasonable to assume that some people will pass on Disney’s bundle deal and subscribe to whichever service best aligns with their preferences.
Whereas Disney is offering some semblance of an a la carte service—with a big discount for bundling everything together—Netflix is more like an all-you-can-eat buffet. Although it doesn’t offer any sports content, it tries to combine kids shows, family-friendly fare, and mature programming into one bundle. Netflix’s price tiers are instead based on video quality and the number of simultaneous streams a subscriber is allowed, and the company has said that it’s committed to this flat-fee structure for the long haul.
Different approaches to content
The main attractions for Disney+ are recognizable franchises and brands, with content from the Star Wars and Marvel universes, films from Disney and Pixar, every episode of The Simpsons (thanks to its acquisition of 21st Century Fox), and content from National Geographic Partners (ditto). Disney even announced this week that it’s going to remake Home Alone for the service.
By contrast—and by necessity—Netflix is taking a different approach. Since it can’t lean on a stable of historic franchises, it’s looking to build up its own through deals with big-name creators. The company acquired comic book publisher Millarworld two years ago (with founder Mark Millar being praised as a “modern day Stan Lee” in Netflix’s press release), and also bought the rights to the Extreme Universe comics in hopes of having its own brand of superheroes. Netflix has also brought in TV creators such as Shonda Rhimes (Grey’s Anatomy, Scandal) and Ryan Murphy (American Horror Story, Pose) for multi-year deals. It even has a multi-year production deal with Barack and Michelle Obama. The resulting content will look a lot different from what’s available on Disney+ or even on Hulu.
Different attitudes toward advertising
Over the years, Netflix has insisted that it will never have commercials. Although the company isn’t above product placements as a way to defray production costs or cross-promote its service with big brands, interruption-free viewing is one of Netflix’s key selling points.
Disney isn’t nearly as zealous about ad-free viewing. While Disney+ will be ad-free, the $13-per-month bundle will include the ad-supported version of Hulu, rather than the ad-free version that normally costs $12 per month, and scaling Hulu’s ad business is one of the reasons Disney is bundling the service in the first place. (“If this bundle serves to grow Hulu subscribers more aggressively, that will be very valuable on the advertising side,” Disney CEO Bob Iger told CNBC this week.) Meanwhile, ESPN President Jimmy Pitaro has expressed interest in bringing more forms of advertising to ESPN+, including sponsorships that feature a brand prominently during sporting events.
Different business models
Netflix’s business model is pretty straightforward: More subscribers equals more money, which Netflix can plow back into more content to attract more subscribers.
The business behind Disney+ is much more complex: Beyond just generating subscription revenue, Disney can make money through merchandising for its popular brands, and by drawing more people to its theme parks, resorts, and cruises. Disney expects its streaming service to lose money for at least five years, but as media strategist and writer Matthew Ball has pointed out, the company can still come out ahead by creating more fans that will spend more money in the broader Disney ecosystem.
There’s room for both
Despite the narrative of Disney versus Netflix as a game of winner-take-all, the two companies are clearly on different paths in the streaming business, and the result will be two distinct streaming services for cord-cutters. Some viewers will prefer Netflix’s focus on new ideas and its commitment to ad-free viewing, while others will drift toward Disney’s recognizable franchises and the value of bundling its services together. Still others will find room in their budgets for both, or cycle through the different services as their needs—and the services’ content—evolves.
As always, the nice thing about cord-cutting is that the choice will ultimately be yours.
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Source : Macworld