Disney says it won’t need to spend like Netflix because it has Star Wars and Marvel

That’s gonna be a fascinating transition.
That’s gonna be a fascinating transition.
Image: Erick Liebowitz/Netflix
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Netflix, Amazon, and Hulu have been spending billions on everything from blockbusters to kids shows to dominate streaming video. Netflix earmarked $8 billion in 2018, Amazon said it would boost its video budget from $4.5 billion last year, and Hulu, which has not revealed its budget for this year, spent about $2.5 billion in 2017.

And Disney? It already has brands people want to watch, says CEO Bob Iger. Like Star Wars, Marvel, Pixar, and Disney. “The demand for those brands, we believe, will give us the ability to spend less on volumes,” said Iger, on a conference call on Feb. 6. “We have an opportunity to spend more on original product of course, but not necessarily to go in a volume direction, say, that Netflix has gone.” He didn’t say how much Disney will spend on content for its streaming service, which launches in late 2019.

Disney still plans to spend big on the high-quality originals it’s planning for the service, like its Star Wars series, shows based on Pixar’s Monsters, Inc. and Disney Channel’s High School Musical franchises, and between four and five feature films a year that will be released exclusively on the platform. Netflix, by comparison, plans to release 80 films in 2018 alone, on top of its original TV shows and licensed series and movies.

Disney has a vast back catalog of programming and steady output from its movie and TV studios that it can funnel toward the new service. New Star Wars, Marvel, Pixar, and Disney movie releases will be streamed when they’re available for home entertainment. And Disney plans to features thousands of hours of old and existing movies and TV shows. It may also take advantage of Fox’s TV and movie archives, or production assets, if its bid to buy the company is approved.

Iger said in November that the service would be priced “substantially below” Netflix, which charges subscribers a minimum of $7.99 a month. Iger said on the latest call that Disney’s new sports streaming service ESPN Plus would cost $4.99 a month.

“We, obviously, are going to need enough critical mass from a product perspective, but when you go to market with Star Wars movies, Disney movies, Pixar movies, Marvel-branded and branded television shows under those umbrellas, in some cases using very well-known IP… that will give us the ability to probably spend less than if we have gone to market with a direct-to-consumer service without these brands,” Iger said.

Disney spent a small fortune acquiring those juggernauts. Lucasfilm and Marvel cost the House of Mouse $4 billion apiece and they have more than paid for themselves. Disney’s three Star Wars films have collectively grossed $4.4 billion at the box office worldwide, Disney said. The Marvel Cinematic Universe has grossed about $11.8 billion under Disney. (The doesn’t include the 2008 Iron Man and The Incredible Hulk movies, which were released before the Disney acquisition, or Spider-Man: Homecoming, which Disney didn’t receive a cut of.)