Walt Disney (NYSE:DIS) will be dipping its magical toe in the subscription multimedia streaming market this month when it launches DisneyLife in the U.K.
If all goes as planned, the entertainment giant will likely dive fully into the streaming market, according to comments made by CEO Bob Iger during the company's recent fiscal-fourth-quarter earnings call.
This should be a boon to "cord-cutters," those ditching or trimming their large cable packages, and Disney shareholders, who continue to be richly rewarded by the company's innovations. Through Nov. 16, Disney's stock has returned 410% over the past 10 years -- trouncing the market's return of 106%.
Here's what you should know.
Meet DisneyLife: Video, music, and book streaming
DisneyLife will give subscribers in the U.K. unprecedented access to a vast universe of Disney content, including hundreds of movies, from well-loved classics such as Snow White to the complete Pixar catalog, which includes animated delights such as Monsters Inc. and Finding Nemo; thousands of Disney Channel TV episodes; as well as music, books, and more.
Content can be streamed or read in English, French, German, Italian, and Spanish, and can also be downloaded to watch offline. The service is slated to roll out next year to several other European countries, including France, Germany, Italy, and Spain, according to the Financial Times.
Disney chose to launch this product in the U.K. for two primary reasons, said Iger on the company's recent earnings call. For one, the U.K. has a "huge affinity for the Disney brand," according to Iger. Additionally, the company needed to factor in deals with pay-TV providers that would hinder it from getting access to the product to sell on its own.
Sorry, Star Wars and Marvel fans, these franchises aren't included in the launch. After all, Disney can't give away the house for 9.99 pounds per month, or approximately $15.22. This price makes DisneyLife more expensive than the video streaming services offered by streaming juggernaut Netflix (NASDAQ:NFLX) and tech behemoth Amazon (NASDAQ:AMZN), but less costly than traditional multichannel cable and satellite TV packages.
I'd not view DisneyLife as competition to the video streaming services offered by Netflix and Amazon -- at least not much. It's a unique offering limited to specific Disney content, plus it's a multimedia service that also includes music and book streaming. Disney's entrance into the market seems a validation of streaming as the future of TV and movie viewing.
Two "firsts" for the innovative House of Mouse
Disney's not the first large owner of top-quality content to cut out the middlemen cable and satellite TV companies by offering a stand-alone streaming service.
Time Warner (NYSE:TWX) opened the floodgates in April when it launched HBO Now, which cost $14.99 per month. CBS (NYSE:CBS) followed suit in July by offering a stand-alone Showtime streaming service priced at $10.99 per month, and just $8.99 per month for Hulu customers who add it to their Hulu subscription. (Hulu is jointly owned by Disney, NBC, and Fox.) Showtime's offering is differentiated from HBO Now by the inclusion of live feeds.
Disney, however, will soon become the first media giant to launch a multimedia direct-to-consumer subscription streaming service. It will also be the first company to offer a consumer-branded subscription product in the U.K. Racking up "firsts" is par for the course for Disney, whose name has been synonymous with innovation since its founding in 1923.
Disney has superhero-like streaming ambitions
Several of Iger's comments on the recent conference call leave no doubt that Disney's subscription streaming ambitions extend beyond its DisneyLife offering and Europe's border. Said Iger:
We're very proud of this [DisneyLife] product, it definitely [emphasis mine] speaks to where we're going as a company and we see opportunities to grow the concept across other markets and perhaps other brands in the future.
Disney has contracts -- presumably very lucrative -- with distributors in the U.S. that would currently prohibit a launch here. However, it seems only a matter of time before the company offers similar services to U.S. consumers.
One of those "other brands" Iger refers to is surely sports cable network ESPN, the phenomenally successful cash cow at the heart of Disney's empire. In fact, Iger has previously said that the company would consider offering a stand-alone ESPN product, though not for at least five years. Due to cord-cutting, ESPN has suffered a modest decline in the number of subscribers, a much-ballyhooed topic that has recently spooked the market. A stand-alone offering would enable Disney to recapture some of these former subscribers who love ESPN but got tired of paying for many channels they don't watch.
Disney has a treasure trove of content that consumers love. So, it's in a strong position to cut out the distribution middlemen and bring some or all of its goodies directly to consumers through stand-alone subscription-based multimedia streaming services. These services should prove to be a big win for consumers, as well as shareholders. They'll allow Disney to capture the dollars of some of the increasing number of cord-cutters. Additionally, the multimedia aspect of the product has the potential to "wow" consumers, while providing Disney with incredible cross-selling opportunities.
Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com, Netflix, and Walt Disney. The Motley Fool recommends Time Warner. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.