The Walt Disney Company released the first details surrounding its new over-the-top streaming services during a fourth-quarter earnings call on Thursday. On the call, CEO and chairman Bob Iger said Disney’s ESPN-branded app, which will launch next spring, will be called ESPN Plus, and that the Disney entertainment service, due out in 2019, will be priced lower than Netflix.
Disney’s direct-to-consumer plans are a huge focus of the company going forward—Iger called them “our highest priority this year”—and anticipation over the forthcoming services may obscure the company’s overall lackluster performance this quarter. Disney’s reported revenue of $12.8 billion was down 3% from the previous year’s quarter. The decline was due to a lack of big movie releases, a drop in subscribers and advertising at ESPN, and Hurricane Irma, which forced Florida’s Walt Disney World theme park to close for two days. Disney shares fell 4% in after-hours trading.
That said, Iger seems bullish about the company’s future, largely due to its streaming plans. He said Disney will start giving demonstrations of ESPN Plus in early 2018, when the company will also determine its pricing. The app will enable users to view highlights, stream ESPN programming, and subscribe to thousands of additional live sporting events.
Disney Magic On Demand
As for the entertainment app, in addition to new Disney, Pixar, Marvel, and Lucasfilm movies released within the first pay window—and films and TV shows from the Disney library—users will also be able to stream four to five films produced exclusively for the service, along with original TV series. The latter will include a Star Wars live-action show, another based on Pixar’s Monsters Inc., and a High School Musical series. Iger says there will not be ads interrupting programing on the service, but that Disney was looking into sponsorship opportunities.
The cost of the app will be “substantially less than Netflix,” Iger says, because it will initially have less volume initially. But it will grow over time, he added.
On the movie front, Cars 3 underperformed compared to last year’s Finding Dory. But Disney expects a turnaround in 2018 with a slew of new Marvel, Pixar, and Lucasfilm releases, beginning with Pixar’s Coco this Thanksgiving and Star Wars: The Last Jedi, on December 15. Iger also announced a new Star Wars trilogy that will be directed by Rian Johnson, director of The Last Jedi.
Theme parks continue to be Disney’s bright spot, with growth at the Shanghai Disney Resort and Disneyland Paris. In 2018, the opening of two Star Wars Lands, one at Disneyland and one at Disney World, is expected to generate about $1 billion.
Iger would not comment on “press speculation” surrounding recent reports that Disney was in talks to buy entertainment assets from 21st Century Fox, but said that while “there isn’t an urgent need” to add new franchises or brands, “we’ll always be looking to add” properties to complement Disney’s portfolio.
Another thing that was not discussed was Disney’s highly publicized battle with the Los Angeles Times over a negative story published about Disneyland. Disney reacted by banning Times reporters from advanced screenings of Disney films, but then it backed down following negative backlash and a boycott effort by film critics at other press outlets.