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Why Did Disney Launch DisneyLife in the United Kingdom?

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Media companies launching direct-to-consumer offerings

According to a Bloomberg Business report, while television viewers in the United States are still subscribing to pay-TV companies such as Comcast (CMCSA), viewers in international markets are increasingly subscribing to over-the-top offerings from US media companies.

These direct-to-consumer offerings include The Walt Disney Company’s (DIS) DisneyLife, which was made available in the United Kingdom (EWU) last year for the equivalent of around $14 per month. Disney has also entered into a partnership with Alibaba (BABA) to launch DisneyLife in China (FXI). Viacom (VIAB), another media company, has launched Noggin in Latin America, a mobile streaming subscription service targeted towards kids.

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Why DisneyLife?

According to the Bloomberg Business report, which cited data from IHS and Bloomberg Intelligence, cable penetration is lower in international markets than in the United States, which has an 84% penetration of cable or satellite subscriptions. This could be one reason why Disney launched DisneyLife in the United Kingdom instead of the United States. Another reason could be that Disney wanted to test the service in a market with a strong affinity for Disney’s brand.

At a Deutsche Bank (DB) investor conference early this month, the company stated that it has seen a good response to DisneyLife in the United Kingdom, primarily for movies and TV shows available through its over-the-top service.

The company believes the service could be launched in other markets and that it could start offering similar digital subscription services for its other brands. Disney makes up 0.8% of the SPDR S&P 500 ETF (SPY). SPY holds 3.9% in the computers sector.

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