Will a Disney-Branded Streaming Service Lead to Premium Movies-on-Demand?



Disney has no intention to launch premium movie-on-demand

As we discussed previously in this series, The Walt Disney Company (DIS) intends to launch a Disney-branded video streaming service in 2019. This has given rise to speculation whether the entertainment giant could also be interested in a premium movie-on-demand service in the future.

However, Disney clarified during its fiscal 3Q17[1. fiscal 3Q17 ended July 1, 2017] earnings call that it had no intention to use its Disney-branded service to encroach on its theatrical viewing window for movies. However, the company noted that it wanted its Disney-branded service to enable its subscribers to buy, download, and rent its movies in the window when they would be available for home viewing.

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Disney has stated that it is not interested in offering a premium movie-on-demand service when its movies enjoy profitable runs at the box office. Disney’s franchise-focused strategy is reaping dividends at the box office. Its movies from the Pixar, Lucasfilm, and the Marvel universes together have earned ~$800 million at the global box office.

The company’s Studio Entertainment business has a strong movie slate in 2018. As a result, Disney expects this business segment to exhibit strong fiscal performance in fiscal 2018.

Comcast could be looking at a premium movie-on-demand service

The increasing buzz regarding premium movie-on-demand services has been mainly due to the gap between the theatrical viewing window of movies and a movie becoming available for home viewing. As shown in the chart above, this window has shrunk from 135 days in 2005 to 102 days in 2016.

Reports surfaced in August that Hollywood studios such as Time Warner’s (TWX) Warner Bros. and Comcast’s (CMCSA) Universal Pictures were in discussions with Apple (AAPL) and Comcast. These talks surrounded the possibility of offering a premium movie-on-demand service only a few weeks after a movie’s release.


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