The media community has been buzzing with the news that Disney plans to launch its own digital subscription channel for movies and series content. Its current license deal with Netflix expires at the end of 2018, after which new Disney and Pixar titles will move to the new channel. Disney will also be launching a standalone ESPN channel. This is a big move in itself, but also foreshadows changes to come in the rapid evolution of the media landscape. Here are three things we can learn from Disney’s move.
There Will Be Blood.
Competition among online services will be increasingly vicious. Netflix already competes online with Amazon and Hulu. Increasingly, established broadcast and cable media companies will struggle to establish their own digital services, while online providers such as Facebook and YouTube, not previously known for original content, begin to build their own libraries. Meanwhile, Verizon and AT&T have been building on their own base of phone and internet users to get into the content business. Not to be outdone, the Wall Street Journal reported just this morning that Apple has set aside $1 billion to acquire original programming. All these trends will increase the pressure on Netflix, which, unlike most of its competitors, relies on subscriber revenues as its only revenue stream.
Netflix should not be counted out, however, The company still enjoys a great advantage in the size of its subscriber base and the money it’s been willing to spend in order to build and maintain that base. Just this week, the service announced that it had snatched the immensely prolific and successful producer Shonda Rhimes away from her long standing relationship with ABC, which, ironically, is owned by Disney. Netflix’s acquisition of the comic book publisher Millarworld is a move to increase control over its own IP. The service faces considerable headwinds, however. As it shifts away from its original identity as the go-to source for old movies and TV series toward a reliance on originals productions, it begins to look just like another TV network, and must compete on their own terms with other content providers with considerably deeper pockets.
It’s All About Branding.
Consumers are already faced with a daunting selection of subscription options, with more to come. A consumer who buys all of the subscription channels available could soon end up paying more than she did for cable. The cord-cutting viewer (and even more, the viewer piling subscriptions on top of cable for access to exclusive programming) will be making choices among the many subscription options. Brand identity will be critical to these choices. Needless to say, Disney is in an especially strong position, both as an offering of library content and a promise of future quality. Niche programmers, such as the anime channel Crunchyroll also stand a good shot in this market. Their passionate fans will gladly pay a fee for programming they can’t find anywhere else.
Search Will be the Next Frontier.
Search capability is not often discussed, but will become more critical to viewer satisfaction. It’s a cliche to say that online program delivery lets us watch “what we want, when we want,” but you can’t watch what you want if you can’t find it. These frustrations will only multiply as the number of services increases. Each network currently has a search algorithm only for its own programming, and in any event, these have a long way to go to deliver custom search results. This next battleground won’t be between program services but between set-top box providers such as Roku and Amazon Fire Stick. A viewer can already get by without these devices. Most TVs have their own direct internet connections or can be hooked up to a laptop. The advantage they offer is the convenience of accessing many services and programs through one home page. The services and programs themselves will be very similar from one device to another, so we can expect that one way they will differentiate will be the sophistication with which they can serve up programs that are tailored to the user’s taste.