Disney superheroes join battle of the streaming services | Business

There were celebrations in the House of Mouse when the Oscar nominations were announced, and for good reason – Black Panther had become the first superhero movie to be nominated for best picture. That’s in addition to the six other Academy Award nominations it received.

It was good news for Bob Iger, the Walt Disney Company’s chief executive, ahead of what could be a challenging year for the media group as it prepares to face up to Netflix with the launch of a new streaming service.

The immediate concerns this week, however, will be the announcement of first-quarter results on Tuesday. Investors have already been warned of a difficult three months. Last November, Walt Disney’s chief financial officer, Christine McCarthy, said that pre-tax profits this year could be down by as much as $600m compared with last year, when the company had a run of successful films such as Star Wars: The Last Jedi, Thor: Ragnarok and Coco.

“Given the significant contributions these films made to operating income in Q1 last year, operating income from our theatrical business in Q1 this year could be down as much as $600m versus 2018,” McCarthy said.

Investors will no doubt be interested in any details that may emerge from Tuesday’s live audio webcast about the upcoming streaming service, called Disney+.

Aiming to challenge Netflix head on, the new venture will be the third in the Disney stable after ESPN+ and Hulu, and will feature original movies and films from Disney brands such as Marvel and Pixar.

Iger has said that one of the target markets will be superfans of franchises such as Star Wars. There will be five key franchises at the heart of the service: Marvel, Pixar, Disney, National Geographic and Star Wars.

Bob Iger, chief executive of the Walt Disney Company.

Bob Iger, chief executive of the Walt Disney Company. Photograph: Scott Olson/Getty Images

The move is being seen as a significant bet on streaming by Disney, which is trying to face down the challenge that Netflix has thrown up to traditional media companies in the past few years.

Netflix added 8.8 million paid subscribers in the last quarter, up 34% compared with a year earlier, as it launched hits including the movies Bird Box and Roma and the series You, The Haunting of Hill House and Sex Education. The company said Bird Box, starring Sandra Bullock, had been viewed by 80 million subscribers in four weeks since it was released over the Christmas holidays.

Netflix’s subscriber base now stands at 139 million. While the streaming service’s growth has slowed in the US, it remains strong in emerging international markets such as India and Mexico.

However, a decision to increase subscription prices has caused market analysts to debate how fast and how far Netflix can use subscription pricing to offset the billions it is pouring into content acquisition. Disney is not alone in attempting to tackle the giant that Netflix has become. AT&T’s WarnerMedia and Comcast’s NBCUniversal are also expected to launch new entrants in pay-streaming.

On a conference call last month, Reed Hastings, the chief executive of Netflix, said that he was not concerned about the new competition as US consumers spend a total of about one billion hours a day watching video.

“They have great content,” Hastings said of Disney, according to Bloomberg. “We’re excited for their launch, and maybe they grow over a couple years to 50 million hours a day, but that’s out of the billion.”

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