Apr 16, 2019

Disney's plan for the theme park of streaming services

Disney’s long-awaited plan to bring it into the 21st century is finally beginning to reveal itself.

Data: Company and analyst reports; Chart: Axios Visuals

The big picture: Its acquisition of AT&T's minority stake in Hulu shows that the entertainment giant is more invested in bundling its services as an attractive alternative to Netflix, rather than building a standalone Netflix killer.

Between the lines:

  • In a must-read piece for Vulture, Josef Adalian argues that Disney's plan is to use Disney+ as a gateway to create other streaming destinations that may one day cater to different types of audiences around the world.
  • This, Adalian argues, is not too far off to the theme park model Disney uses to showcase its mega-franchises, like Pixar, Marvel and Star Wars.
  • Hulu, of course, would be one of those destinations, as would its sports subscription bundle ESPN+ and its Indian streaming behemoth Hotstar.
  • The company said last week that it might sell Hulu as a part of a bundled service with Disney+ and ESPN+.
  • AT&T said Monday that it's selling its minority stake of Hulu into Hulu's streaming video joint venture, giving Disney a total of 66% ownership of Hulu and Comcast/NBCUniversal a 33% ownership.

Be smart: Pricing matters, and analysts are bullish on Disney's $7 monthly bill.

  • BTIG Analyst Rich Greenfield explains in a note to clients that Disney's price points look attractive compared to some of its premium cable counterparts, like Showtime and Cinemax.
  • As for WarnerMedia's pricing plans: "Even if we can justify HBO’s existing premium price point of $14.99, with Disney+ in the marketplace at just $6.99, it would appear to make the launch of a premium to HBO-priced WarnerMediaFlix service challenging," Greenfield writes.

Yes, but: For now, it's worth noting that everyone is losing money in the streaming wars.

  • A recent analysis from MoffettNathanson projects that Disney won't start making money off Hulu until 2023, and it won't make money off of its other services by then either.
  • Netflix raised its long-term debt last year by another $2 billion.
  • AT&T says it will use the proceeds from the Hulu transaction to reduce some of its massive debt load that it incurred from the Time Warner deal last year.
  • Disney told investors it thinks it can get 60–90 million global subscribers in the next five years. That's still a far cry from Netflix's 139 million global subscribers, and the company projects that it brought in another 9 million last quarter.

The bottom line: Via Adalian: "People need to stop thinking of the streaming wars as a zero-sum game — but it will have some serious and legit competition among folks who want to cut the cord and programming costs."

Go deeper

Exclusive: Global trust in the tech industry is slipping

Illustration: Aïda Amer/Axios

The backlash against Big Tech has long flourished among pundits and policymakers, but a new survey suggests it's beginning to show up in popular opinion as well.

Driving the news: New data from Edelman out Tuesday finds that trust in tech companies is declining and that people trust cutting-edge technologies like artificial intelligence less than they do the industry overall.

"It was 30 years ago, get over it": Mike Bloomberg's partner brushes off NDA concerns

Diana Taylor at a Mike Bloomberg event last month. Photo: Ron Adar/Echoes Wire/Barcroft Media via Getty Images

Diana Taylor, Mike Bloomberg's longtime partner, dismissed the concerns surrounding non-disclosure agreements used at his company, Bloomberg LP, telling CBS News that she would say to those bothered by the allegations, "It was 30 years ago, get over it."

Why it matters: Democratic candidates have used the NDAs as a talking point against Bloomberg, calling on him to allow women to speak about the reported sexual harassment and gender discrimination they faced while working for him.

Trump's opportunity to use Bernie as an economic scapegoat

Illustration: Aïda Amer/Axios. Photos: Zach Gibson/Stringer, The Washington Post/Getty Contributor

Bernie Sanders is poised to become an economic scapegoat for both the White House and Corporate America, assuming that Sanders comes through Super Tuesday unscathed.

The big picture: If the U.S. economy remains strong, President Trump and CEOs will claim credit (as they've been doing for three years). If it turns sour, they'll blame Bernie (even though it's a largely baseless charge).