On August 8, Disney, the world’s largest entertainment company, made an announcement that will significantly alter the future of the industry. The Mouse House is throwing its hat into the streaming ring.
By 2019, there should be a Disney SVOD service (in part thanks to Disney’s now majority stake in BAMTech) that will house children’s television content and exclusive first-runs of films from Disney and Pixar, as well as exclusive content created for the service. As it moves into the space, Disney will not renew its film distribution agreement with Netflix, which expires after the 2019 slate of Disney and Pixar films. (There will be a separate streaming service from Disney featuring ESPN content.)
All of this means that Disney is betting on its new service to make more than the $300 million in revenue it gets from Netflix. If it does, it will be thanks to one very important demo (and one that has been maligned in the age of peak television): kids. The platform will be one of the only SVODs aimed predominantly at children in the United States, and between the lack of competition and the brand value, it’s likely a very smart move for Mickey.
“There is a huge opportunity. Parents worldwide have a need for a safe and trusted environment for their kids to be exposed to streaming content and experimenting with technology,” says Ashwin Navin, CEO and cofounder of Samba TV. “It’s still a wide open field.”
Disney will bring its content to where children are going. According to Ofcom, time spent on traditional television among children ages 5 to 15 decreased 8.1% between 2015 and 2016, while time online increased 9.5%. In the 2 to 11 age group, time spent watching live television decreased by two hours per child from 2015 to 2016, according to Nielsen. By 2019, 74% of children under 11 are expected to consume digital video, according to research firm EMarketer. In 2013, that number was 68%.
This will allow the streaming service to bolster Disney Channel content’s viewership after a period of declining ratings as kids turn to the internet. For the first six months of 2017, prime-time ratings for Disney Channel fell 23% among the 2-11 and 6-14 year old demographics. For the full day, ratings fell 13% and 18% in the respective demos.
“The Disney Channel is super active; they are always working on new shows,” says Mike Vorhaus, the President of Magid Advisors. “This is going to give them another outlet and the ability to pick up people they may be losing to other content.”
Read more from Forbes.com here.