On Disney’s earnings call earlier this week, CEO Bob Iger was asked about the company’s video app strategy - would it be interested in launching one big “aggregated” app housing all of its content, or will it continue to pursue multiple apps with each targeting particular audience segments?
It’s an interesting question because it goes to the heart of whether consumers prefer a big basket of content at one price (the way the pay-TV industry’s multichannel bundle has been effectively offered) or more discrete content services that consumers individually choose to pay for (as has emerged with streaming video and music services, plus a wide variety of other apps)?
I believe Iger’s explanation of Disney’s app strategy was right on the mark:
“We don’t really want to go to market with an aggregation play that replicates the multi-channel environment that exists today because we feel consumers are more interested in essentially making decision on their own in terms of what kind of packages they want.”
The comment perfectly encapsulates the forward-looking approach Disney is taking to its business and why it has an outstanding chance of winning.
Admittedly, a big bundle can offer both simplicity and value. It’s compelling to feel you’re getting a lot for a set price. And people are busy, so forcing decisions can cause paralysis as “the paradox of choice” demonstrates. The multichannel bundle has benefited from these considerations for decades.
But the Internet has scrambled the equation for video, affording consumers more control than ever. Control is empowering and can lead to spending even more. Consumers have long sought to have a la carte access to just the channels they wanted. A la carte isn’t coming to the pay-TV industry any time soon, but Amazon Channels, for example, shows that a marketplace for dozens of specialized SVOD services are in fact already here.
Iger, like a lot of others in the industry, is betting that consumers will value control more than simplicity, and are sufficiently savvy to make smart decisions. So Disney will have ESPN+. It will have its new streaming service launching late next year. It will have Hulu. And I’d wager it will ultimately launch a range of other SVOD and/or live services as well, just as CBS is doing with CBS All Access, CBSN, CBS Sports HQ, ET’s online service, etc.
For Disney, this is when bundling becomes interesting and why Hulu with its 20 million+ subscribers (and over 1 million Live subscribers) is a hugely valuable asset. Having viewership data on a user in one app can help drive targeted bundled offers for other apps. Hulu subscribers will be fertile targets to become early subscribers of the new streaming service launching next year. By analyzing Hulu viewership at the show level, Disney can highlight certain types of TV shows/movies in its new service that will have strong appeal.
Throw in promotional pricing and voila, Disney is on the road to creating its own bundles.
The difference however, as Iger seems very well aware, is that these are modern bundles - constructed and chosen by consumers. Iger wants to push decision-making about Disney’s streaming services to consumers, something today’s online environment has already primed them to do.
With Disney’s vast trove of assets, there is infinite potential for how to carve them up into different services. Like CBS is doing, some will be subscription and have options for ads or no ads. Others will be free with ads. But they’ll all act to reinforce one another, creating a new flywheel of value for the company built around user data and choice.
It’s an approach that will keep Disney highly competitive in an era when companies like Netflix, Amazon, Google, Apple and Facebook are all going to be gunning for the same subscribers and advertisers.
Categories: Apps, Studios, SVOD
Topics: Disney