Disney’s bet on BAMTech could signal big advancements for its data and platform strategy.
The streaming video provider, once majority-owned by MLB Advanced Media, proved such a valuable investment to Disney that it acquired an additional 42% stake in the company for $1.6 billion in August. It previously owned a 33% stake in BAMTech.
“Disney certainly views BAM as a linchpin for a number of things,” said Brian Wieser, senior analyst at Pivotal Research Group. “I think they’d describe it, rightly or wrongly, as a core suite of technologies, related services and partner integrations for direct-to-consumer, video-based products.”
BAMTech serves as a common platform powering all of Disney’s direct-to-consumer offerings.
That status is significant, considering Disney pulled its films from Netflix as it builds its own branded streaming video service.
“BAMTech will be the foundation of Disney’s direct-to-consumer strategy, both for the new ESPN+ product (and the completely overhauled ESPN app), the eventual Disney branded product and many more initiatives,” noted Dan Salmon, managing director of US media and internet equity research for BMO Capital Markets.
Disney already had the content piece and a stable of recognizable brands; what it needed was an underlying technology platform, Salmon said.
Disney Chairman and CEO Bob Iger fielded several questions from investors about BAMTech during the company’s Q1 earnings call last week.
Iger noted the tech will help Disney/ESPN manage user data and improve customer acquisition and retention while fueling “far more dynamic advertising opportunities and experiences.”
ESPN’s reimagined mobile app, which debuts this spring, will tap into BAMTech’s engine to power video personalization.
“ESPN’s [new app] will use BAMTech’s engine, data management and all of the bells and whistles for personalization,” Iger said. “Videos and stories will be customizable by team, location and general interests, and machine learning will enable the app to determine what the [consumer] is interested in and feed them more of that.”
To Dave Morgan, CEO of Simulmedia, it makes sense that Disney would groom BAMTech as an audience data platform powering advanced advertising beyond its core service, which is driving streaming delivery and subscription services.
“On a comparative basis, there is much more complexity – and money – in technology that optimizes advertising,” Morgan said. “What Disney is doing is following the money. Content management technology is critical, but like we saw with the web, it will soon become a commodity” if companies like Amazon and Google offer streaming video management for less.
Although it’s too early to tell Disney’s long-term plans for BAMTech, dynamics could change if and when Disney’s bid for 21st Century Fox’s assets – and majority ownership in Hulu – goes through.
Hulu has its own advanced TV ad stack.
“It may very well be that Hulu’s equivalent capabilities are superior or that even HotStar [Star TV’s OTT service] is better,” Wieser hypothesized, “so who knows if [BAMTech] will become one common system across everything Disney runs.”
BAMTech declined an interview for this story.
