Disney+ getting more kids content after UK pay-TV carriage fight; are we witnessing Disney’s future?

Disney+

Disney+ has been a big hit with consumers globally, topping 54 million subs in May, just a half-year after launching.

But the direct-to-consumer (D2C), over-the-top (OTT) play hasn’t always had the same luck with pay-TV operators as it’s rolled out globally.

Disney has been butting heads with Virgin Media and Comcast-owned Sky in the United Kingdom over carriage deals for Disney Channel, Disney XD and Disney Junior since it launched in the UK and Ireland in March. Now, it’s planning to take all three channels off those pay-TV services as of Oct. 1.

The result? Disney+ will then be the “exclusive home for content” for those channels in the UK.

Despite the brouhaha in the UK, Disney says it “remains committed” t0 kids programming and will look to make carriage deals with operators in other markets Disney+ has launched in.

Disney– for now – will keep its other channels, like Nat Geo Wild, National Geographic and Fox, on air in the UK.

More Disney+ launches coming

The Disney+ streaming service has been rolling out steadily around the world since it launched in the US, Canada and the Netherlands in November and drew 10+ million signups on the first day.

A week later it launched in Australia, New Zealand and Puerto Rico and, in April, it launched in India as Disney+ Hotstar.

It launched in western Europe in March, in addition to the UK and Ireland.

Next stop? Eight more countries in Europe, including Portugal, Belgium, Finland, Iceland, Luxembourg, Norway, Sweden and Denmark in September, followed by Latin America toward the end of 2020.

The Bottom line

Carriage disputes happen all the time. In the US, they’re as regular as rain, and they (almost) always result in deals that both operators and content owners grudgingly accept.

But tensions are bound to get worse as streaming becomes more dominant.

Still, in the US, as recently as 2010 there were just eight carriage disputes that resulted in blackouts. That number jumped to 165 in 2018 and hit 276 by the end of October last year (2013 set the previous high of 213 blackouts).

While Disney’s disruption could be problematic for some streaming services — Sky is the biggest pay-TV provider in the UK –the panache of Disney+ means it likely won’t matter – at least too much. Disney doesn’t need – at least in the UK – to be in an operator’s lineup to be successful.

The move does beg the question: Has Disney gone all in on streaming, at the expense of its traditional linear TV business?

No doubt.

While it continues to play the traditional TV game as well, Executive Chairman Bob Iger has said repeatedly that streaming is the future for Disney.

As he noted during its 2019 investor day, global D2C paid subscriptions are growing at a CAGR of 37%, expected to top 810 million globally in two years.

More critical is the amount of content being consumed. That’s a number growing at a CAGR of 50%. eMarketer and IHS estimates put the total hours of paid D2C video at 1.2 billion hours a day by 2020, up from 260 million in 2018 and just 20 million in 2010.

CEO Bob Chapek, is on the same page, obviously, saying during the company’s Q2 2020 earnings call with analysts that “our company’s top priority and key to our growth is our direct to consumer business.”

Hear that, pay TV?

Stay tuned and stay well.

Jim O’Neill is Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn