Disney, iflix Team Up to Take Down Netflix

Malaysia-based streaming video service iflix will be launching a new "channels" feature shortly, and has announced that Walt Disney Co. (NYSE: DIS) will be the first content provider to use it. The Disney iflix channel will include content from Disney's TV properties as well as Marvel and Pixar movies.

This announcement follows Disney's very recent decision to end its partnership with Netflix Inc. (Nasdaq: NFLX) and launch its own worldwide video streaming service in 2019. On the face of it, the iflix agreement doesn't really align with that strategy: Disney is merely swapping one distribution partner with another. However, Disney on iflix will have its own channel, and while pricing was not disclosed, I suspect Disney will most likely assess its own pricing. Netflix may not have been willing to allow Disney to create its own package of content and attach its own separate price tag to its service, and that might have contributed to the decision to part ways. (See Disney Joins OTT Bandwagon.)

This would suggest that Disney's decision to "go it alone" might actually not be all that alone. In fact, the announcement at the end of the second quarter of 2017, about a service that it plans to launch only two years later, seemed a bit rushed. Details are sparse at the moment, but the company did make it clear that worldwide distribution was to come later. This iflix announcement suggests that it is trying to achieve a sort of partial independence globally, where it gets to distribute content online via a Disney-branded service without setting up its own local infrastructure or marketing presence. This will also allow it to build a global footprint for its service right away while it works on a longer-term strategy.

Meanwhile Disney's strategy in the US will be quite different. It appears from its initial comments that the media giant is looking at a direct-to-consumer service within the US, and with its acquisition of a majority stake in BAMTech from MLB, it has the infrastructure assets to do so -- not just for its own service, but for other content owners as well. (See Why Disney Could End Up Streaming for AT&T.)

This is a useful arrangement for iflix too, and provides a marquee partner to kick-off its channels strategy. In addition to movie rights, iflix will also get some of Disney's hit TV shows and children's programming. Most importantly, it will get exclusive iflix original content developed in collaboration with Disney’s MCN Maker Studios.

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It probably doesn't hurt that iflix technology chief Emmanuel Frenehard held the same role at Disney International, leading technology strategy and operations across all Disney subsidiaries outside North America until last year. Disney management should be confident that iflix's technology will support Disney's quality standards.

The deal also highlights the growth of the iflix portfolio. From a small Malaysian start-up it has grown rapidly into a global service including several countries in Asia, the Middle-East and North Africa, with significant investment from leading broadcasters Sky and Hearst, and now a reference partner in Disney.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation

Joe Stanganelli 8/23/2017 | 9:08:36 PM
Re: Be interesting to see @wanlord: Considering all the people who already subscribe to multiple online video services (sometimes in conjunction with cable), it's not that much of a stretch of the imagination, IMHO.

People have for years cried out for a la carte cable packages instead of the jumbo bundles that are foisted upon them. Online video services like these are effectively making this possible. Paying for a few online video services that give you your favorite flavors of content is cheaper than a lot of cable packages.
Joe Stanganelli 8/23/2017 | 9:06:44 PM
Re: Netflix @macemoneta: I'm not necessarily convinced. Netflix coexists with Hulu and a bazillion others... And HBO does quite well by being highly protective of its content (piracy aside).

Disney is actually quite similarly positioned to HBO. The availability of a great deal of Disney content (such as that of its classic animated films) is very limited. (Remember "the Disney vault"?). I think Disney could do quite well here -- without putting any meaningful dent in Netflix's business.
macemoneta 8/22/2017 | 4:07:49 PM
Netflix Given a choice between Netflix original content and Disney Original content, I'd go with Netflix.

Of course, the real loser will be both services. For many people the choice will become additional subscription cost or piracy. No matter what percentage chose piracy, both services will lose viewers, over and above splitting the subscriber base.
wanlord 8/22/2017 | 3:53:54 PM
Re: Be interesting to see I can't imagine too many people paying yet another monthly fee to watch just Disney content.  Seems better to just work closer with Netflix since they already have the infra and the eyeballs. 
jbtombes 8/22/2017 | 3:24:29 PM
sports? Earlier this year, iflix announced plans to live-stream Indonesian soccer games. (Another distinction from Netflix, which doesn't do live.) There should some synergy with Disney's sports assets.
brooks7 8/22/2017 | 12:23:08 PM
Be interesting to see  

A whole lot of Disney content targets kids.  Not sure how that relates to any of these services.  I would think that Disney would want Adult Content (as available on Netflix) on the same service so that Parents subscribe to the service regardless of what their kids want.  

Most basic Pay-TV packages (is that what we call them today?) come with a number of Disney Kids channels.  Not sure why folks would spend money just to be able to watch the Disney Streaming Service.



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