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Netflix treads cautiously by announcing weak forecast ahead of Disney+ launch

Shortly after the announcement of Disney’s streaming service Disney+, Netflix gave a weak forecast, predicting it would amass five million new streaming subscribers from April through June, according to multiple media reports. This was slightly below the 5.48 million that industry analysts estimated, as surveyed by financial data and software company FactSet.

Disney+ is set to roll out in November this year in the US with a plethora of theatrical and TV content. In its first year, the launch will include more than 25 original series and 10 original films, documentaries and specials. Disney+ will also feature all 30 seasons of The Simpsons and audiences will have access to family-friendly Fox titles such as The Sound of Music and Malcolm in the Middle.

Disney intends to “rapidly expand” its new streaming service globally, with plans to be in nearly all major regions of the world within the next two years. In its recent Investor Day, chairman and CEO Bob Iger said Disney+ marks a “bold step” forward in an exciting new era for the company, one in which consumers will have a direct connection to the wide array of the company’s creative content.

“We are confident that the combination of our unrivaled storytelling, beloved brands, iconic franchises, and cutting-edge technology will make Disney+ a standout in the marketplace, and deliver significant value for consumers and shareholders alike,” Iger said.

Meanwhile, the possibility of Disney+ eventually landing on Southeast Asia’s shores only adds on the wide range of streaming services that consumers here already have access to – iflix, Netflix, Viu and Catchplay, among others. With so many players already in the video streaming scene, it remains to be seen if the launch of Disney+ will significantly impact consumers here.

Girish Menon, vice president, client development, [m]PLATFORM APAC told A+M that the variety of streaming services available will make it even more expensive and “painful” for consumers in the short term. According to him, new streaming services will essentially replace the various cable channel groups that customers are accessing via their Pay TV packages. Although the streaming services were created as cheaper and more manageable alternatives as compared to the “bloated” 100-200 channel Pay TV packages customers currently pay, Menon said there are now so many of these separate services that it has put customers into the same mess which they were supposedly trying to solve.

“If as a customer, I like two shows from iflix, one show from Viu, one from Hooq, three from Netflix and three from Disney+, then I’m probably going to have to pay as much for all of these per month as I was paying for my PayTV package. And probably still keep paying for live sports from my linear cable/pay TV provider,” he said.

To solve this, streaming services should ideally operate like Apple iTunes, which gives consumers the option to watch one show or one episode for US$0.99, so they can pick and choose what they want to watch on which streaming service. This is because it does not make sense for consumers to pay approximately US$10 to US$12 per month just to watch one show.

“In terms of differentiation, Disney+ obviously has an advantage in terms of Hollywood content, as they own the IP for Marvel, Star Wars, Pixar and now Fox. But we also know that consumers in Asia love to watch content in their local Asian languages,” Menon said. He added:

Whichever service produces good quality content in the relevant local Asian language featuring local stars will get a significant share of subscriptions.

Also agreeing with Menon is Ampersand Advisory CEO Sandeep Joseph, who said in Asia, especially Indonesia and India, local content will still likely be the main driver of subscriptions. With streaming services battling to become one of consumers’ top three choices, Joseph said brands such as iflix and Viu, for example, will need to win the local content game where they have a slight head start in terms of time, but are disadvantaged in terms of budgets compared to players such as Disney+.

“Locally-focused content is also travelling well, in some cases. Netflix’s Hindi-language horror series Ghoul developed an audience in the US, UK, Canada and Australia, where 45% of viewers watched it with English subtitles. Andhadhun, an Indian film, made bigger box office in China compared to India,” Joseph said. He added:

Localisation with potential international cross-over appeal is the key for Asian subscription services.

While Disney+’s main advantage is its vast library of content, its price of US$6.99 is a “clear signal” that it is willing to compete with other existing streaming players in the market, Joseph said. “Given its vast resources and content library, as well as originals in the works, Disney should be able to sweep some pretenders such as Apple TV+ and others aside easily,” he added.

Also weighing in on the conversation is Nadya Tamara Susanto, associate media director, Carat Indonesia who said from an audience’s perspective, Disney+ is expected to bring uniqueness amongst competition. The variety of content it offers and the service’s value for money also plays an important role in differentiating it from other players.

“Disney’s DNA as an education and inspirational content producer will surely bring positive impact [to the community]. At the end of the day, it is all about giving variety to the audience. From a media agency stand point, Disney+ will offer creative and innovative solutions to clients,” she added.

How brands can work around ad free streaming services

Similar to Netflix, Disney+ will be ad free and while some brands might see this as a challenge, Joseph said brands can still work around this through product placement, brand integration in content, strategic partnerships, events, social media and activation built around apps, content and their consumers.

“Innovation and creativity is critical for success. The old models of reach and frequency will yield to relevance and pleasant surprises. Brands need to recognise that advertising is still intrusive and less preferred by Millennial audiences, who are driving demand and conversations,” he explained.

Nonetheless, Joseph said the streaming space will continue to evolve and companies need to watch out for “subscriber fatigue”, when consumers grow tired of subscribing to new apps. “That will leave space for some free, ad funded apps. In the end, the consumer still wins,” Joseph said.

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