Why Disney Will Not be Losing the Innovation Race

Desney Plus

writer icon Mette Jensen     Disney   |   Business     🕐 09. Dec. 2019

It has been a month since Disney+ launched. With the new and highly anticipated streaming service, consumers in certain regions now have access to content such as Star Wars, Pixar, the Marvel superhero movies, National Geographic, and all of the Disney classics collected in one place. As contracts made with other streaming services expire, Disney is expected to pull all of their own content under their own roof.

"There's only one Disney," says CEO, Robert Iger. For a decade he has been acquiring new major brands and original content to strengthen the Disney company for a future in streaming. "No one can come out and have a product that's like ours, because no one's got those brands" Iger stated.

Acquisitions have set the Momentum Stage for Disney+
The process of reclaiming Disney’s intellectual property and expanding the Disney product range has been long in the making. In fact, Disney made its first important and major acquisition only a year after Robert Iger became the CEO of the company.

Pixar and Disney had previously been working closely together, producing major hits such as ‘Toy Story’ and ‘A Bug’s Life’. Pixar delivered creativity and technology while Disney handled distribution. With accelerating innovation and major companies such as DreamWorks and Fox competing to create the best content, Disney had been struggling to find its own DNA and rejuvenate itself.

With the acquisition of Pixar in 2006, Robert Iger ended a public feud between the previous Disney CEO, Michael Eisner, and Apple-innovator and major shareholder of Pixar, Steve Jobs. This reconciliation was vital for Disney. The company lacked innovation and was desperate for commercial success: Both things Pixar had been very successful at doing for the past decade, in contrast to Disney. Pixar was their golden ticket.

Disruption of an Industry: Content Joins Forces with Distribution
With streaming booming, Disney, too, had been innovative. They were monetising their content in an unprecedented down-funnel way.

The Lion King made 313 million dollars at the box office in 1994, while The Lion King merchandise grossed 1 billion dollars that same year. Who would not want to add an additional revenue source like this?

Disney understood the importance of windowing. Their movies could only be purchased in limited editions, creating a sense of urgency that boosted their sales. Nevertheless, times and technology have changed. People no longer buy DVDs or VHS tapes in the amounts they used to. Instead, they prefer to have options without having to leave the couch.

Disney+ connects Disney directly to the consumer. By owning distribution, Disney can cut cable providers and other intermediaries and increase their own wallet share. With major blockbuster titles in their portfolio and no other way of accessing them than through Disney+, their streaming service is a serious competitor to all other streaming services.

Late starter
Disney missed the first innovation window and will not be missing the second. Besides Disney+, other players have entered the arena of streaming in 2020. These include NBC and Universal’s service Peacock, CBS All Access, Apple TV+, and HBO changing their strategy in the US by joining forces with Warner Bros. Not to mention major established competitors such as Netflix and Amazon Prime Video.

2020 is looking to be the most enticing year ever for streaming. Certainly from the perspective of the consumer. For the respective companies, the battle is to retain customers, as well as to attract new ones.

With an abundance of content being created at an unprecedented pace, consumers will start to prioritise which streaming services they want to subscribe to. Obviously, a trusted name can find it easier to sell to more customers, but all of the aforementioned companies are now well-known. What truly sets them apart is their original content. This is where, as Disney CEO Robert Iger has noted, Disney has the upper hand.

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