Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Disney+ Is on Fire TV After All

By Stephen Lovely - Nov 16, 2019 at 2:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Originally, Disney planned to launch without a Fire TV app.

For better or for worse, Disney's ( DIS -1.90% ) Disney+ is all that tech investors and streaming video observers are talking about right now. Its massive launch has shown the marketing muscle of deep-pocketed Disney, and its launch-day glitches have reminded us just how difficult streaming video can be at scale. Disney+ already has a healthy user base, and its customers are streaming on all manner of devices, from smart TVs to smartphones. Among the platforms Disney+ is streaming on are Roku, Apple's Apple TV, and Alphabet's  Android TV. Also in on the fun is Amazon's ( AMZN -1.81% ) Fire TV platform -- but that almost wasn't the case.

Just days before launch, Disney+ appeared poised to enter the scene without support for one of the two most popular home streaming platforms on the planet (Roku is the other). What was wrong -- and what changed?

Two businessmen shake hands

Image source: Getty Images.

All about advertising

So what was the nature of the disagreement between Disney and Amazon? According to The Wall Street Journal [paywall], it was all about advertising. Amazon wanted the right to sell advertising space on Disney's apps; Disney was, of course, against that. 

Disney has promised that the Disney+ service will be ad-free, but that doesn't appear to be strictly true. And Disney and its various subsidiaries have a lot of different apps on Amazon's Fire TV platform, including the Freeform app and ESPN+, so discussion of advertising space on "Disney's apps" (plural) could involve any number of those. Amazon reportedly asks for percentages of advertisement inventory in discussions like these, so we're presumably not talking about Amazon creating new spaces for ads within Disney+.

Advertising space enables Amazon to monetize its very popular platform. Selling advertisements -- both on menus and home pages within Fire TV itself and, through Amazon's advertising platform, within apps running on Fire TV -- is a proven way to monetize streaming platforms like Fire TV and Roku.

A deal between new rivals

There's another variable here, of course. Amazon and Disney are now major streaming rivals. Amazon owns a subscription video on demand (SVOD) service as well as a marketplace for buying and renting digital copies of movies and TV shows. Disney, of course, owns Disney+; it also owns Hulu and ESPN+. Amazon uses its platform to surface Amazon-backed content, including free-with-Prime SVOD options and movies for rent or sale. This is another way that it monetizes the Fire TV platform. So while Amazon presumably didn't want Fire TV to be left out of the biggest app launch since Netflix, and Disney presumably didn't want its big Disney+ debut marred by lack of support for one of the most widely used home streaming platforms in the world, both companies also had reasons not to cooperate. I speculated about Disney's likely distaste for the Fire TV platform (at least as it contrasts with a more "agnostic" platform like Roku) when the story of the then-missing Fire TV app first broke.

We don't yet know if Disney agreed to Amazon's demands for ad space or what sort of compromise was reached. But we do know that Disney+ was available on Fire TV when it launched on Nov. 12, giving a happy last-minute ending to a prolonged disagreement between two streaming rivals that will play a large role in determining the future of this business. So far, Disney+ is growing even more quickly than analysts expected. For now, everyone's happy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$3,443.72 (-1.81%) $-63.35
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$142.15 (-1.90%) $-2.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
656%
 
S&P 500 Returns
144%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.