Home Digital TV and Video Disney Girds For The Streaming Wars With Its Checkbook

Disney Girds For The Streaming Wars With Its Checkbook

SHARE:

Carving out a spot in the ever-crowded direct-to-consumer streaming market is an expensive proposition – and Disney is ready to spend.

DTC is “a bet on the future of this business,” Disney CEO Bob Iger told investors on Tuesday, the equivalent of pouring money into building a theme park.

“We are deploying capital so that the long-term growth of this company is stronger than it would have been without these investments,” Iger said.

Disney, which beat earnings estimates overall, said that its DTC and international segment posted revenue of $918 million and an operating loss of $136 million. The company expects that the money it’s allocating to its DTC efforts will negatively impact financial results again next quarter by around $200 million, mostly related to its streaming subsidiary ESPN+.

In an SEC filing in January, Disney revealed a $469 million loss due to higher operation, programming and production costs related to its consolidation of BAMTech, the technology Disney uses to power its DTC streaming services, including ESPN+.

But no pain, no gain.

While BAMTech may have created a loss on Disney’s 2018 balance sheet, it’s proving its worth as the underlying tech behind ESPN+, and will support Disney+ when it launches later this year.

You need reliability and a good user experience, especially during peak consumption periods, if you’re going to play and win in the streaming wars.

For instance, after Disney shelled out $1.5 billion on a five-year deal with UFC in May 2018, Iger said that 600,000 people signed up for ESPN+ during the first UFC fight night.

BAMTech handled just under 15,000 transactions a minute during that first fight, Iger said.

“The fact that we have a technology platform that is working, a user interface that is working, the ability to sign up consumers en masse … all adds up to a very positive picture ahead of the launch of the Disney+ service,” he said.

Subscribe

AdExchanger Daily

Get our editors’ roundup delivered to your inbox every weekday.

But the stability of underlying technology doesn’t matter if there isn’t enough content to make a streaming service sticky. For ESPN+, Iger hopes more combat sports will drive growth in the coming months.

For Disney+, that means funding original content. It takes billions to do that, and Iger knows it.

“Since we are betting on this DTC business long term, we obviously have to fuel it with intellectual property,” he said.

Netflix (which, P.S., doesn’t consider Disney a competitor) is starting to act a bit like a movie studio – but hey, Disney already is a movie studio.

“We’re going to leverage the people and the capabilities of all of our traditional businesses that we’re doing today to grow the product with some incremental cost, of course – but very efficiently,” Iger said. “That gives us the ability to scale up nicely in terms of our output and not invest that much in overhead or infrastructure to do it.”

Must Read

Advertible Makes Its Case To SSPs For Running Native Channel Extensions

Companies like TripleLift that created the programmatic native category are now in their awkward tween years. Cue Advertible, a “native-as-a-service” programmatic vendor, as put by co-founder and CEO Tom Anderson.

Mozilla acquires Anonym

Mozilla Acquires Anonym, A Privacy Tech Startup Founded By Two Top Former Meta Execs

Two years after leaving Meta to launch their own privacy-focused ad measurement startup in 2022, Graham Mudd and Brad Smallwood have sold their company to Mozilla.

Nope, We Haven’t Hit Peak Retail Media Yet

The move from in-store to digital shopper marketing continues, as United Airlines, Costco, PayPal, Chase and Expedia make new retail media plays. Plus: what the DSP Madhive saw in advertising sales software company Frequence.

Privacy! Commerce! Connected TV! Read all about it. Subscribe to AdExchanger Newsletters
Comic: Ad-ception

The New York Times And Instacart Integrate For Shoppable Recipes

The New York Times and Instacart are partnering for shoppable recipe videos.

Experian Enters The Third-Party Data Onboarding Business

Experian entered the third-party data onboarder market on Tuesday with a new product based on its Tapad acquisition.

Albertsons Takes Its First Steps Into Non-Endemic Advertising, Retail Media’s Next Frontier

Albertsons is taking that first step into non-endemic advertising next week via a partnership with Rokt to serve ads to people who have already purchased groceries.