The gloves are off in the video streaming competition. Walt Disney (DIS) has banned Netflix (NFLX) from advertising on all of its television networks but ESPN, The Wall Street Journal reported on October 4. Netflix’s video service doesn’t include sports content or news.
The ban comes as Disney prepares to launch its Disney+ video service on November 12. It, along with Apple’s Apple TV+, are set to compete with Netflix next month.
Disney wants to use its media properties to promote Disney+
Disney has shared aggressive marketing plans for its Disney+ service. During its Investor Day in April, Disney said it had developed a strategic campaign to drive awareness of Disney+, targeting at least 95% of its target audience. Disney+ content and marketing head Ricky Straus said, “One of the clear advantages we have in marketing Disney+ is our access to an incredible number of touch points across The Walt Disney Company. And as you would expect, we plan to leverage this unparalleled reach, engaging our millions of fans and influencers across our brands and around the world.”
In August, Disney released its June quarter results and held an investor briefing. During that briefing, Disney CEO Bob Iger again talked about marketing Disney+ aggressively. He said, “I’m actually going through a comprehensive marketing plan with the team next week. Comprehensive probably is an understatement. It’s going to be treated as the most important product that the company has launched in — I don’t know, certainly during my tenure in the job, which is quite a long time.” Iger became Disney CEO in September 2005.
Netflix losing access to Disney’s audience at a critical moment
The advertising ban comes at a critical time for Netflix, which releases dozens of new shows and movies every month. Given the fierce competition awaiting it from Disney and Apple, Netflix needs to promote its new titles.
Netflix failed to hit subscriber growth targets in the June quarter, partly because the news titles Netflix released in the quarter didn’t reach many potential customers. “We think Q2’s content slate drove less growth in paid net adds than we anticipated,” Netflix told investors in July.