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Disney+ doesn’t need pay-tv, yet!


Netflix knows just how valuable pay-tv operators have been to its success. Disney+ doesn’t need operators today, but once the dust settles, it will find pay-tv operators can help a lot!

Pay-tv a critical part of Netflix’ strategy

Despite the decline in markets like the U.S., pay-tv still wields much influence with large numbers of TV viewers. Netflix understands the importance of pay-tv and has made partnering with operators a priority for several years. According to UK analyst firm Ampere Analysis, the strategy is paying off. Netflix now has access to 300 million pay-tv homes around the world – half of all pay-tv homes outside of China – through its many operator relationships.

Netflix’s approach to Europe is an excellent example of how the company has leveraged operators grow. When it first launched there it was not a well-known brand. The company placed particular emphasis on partnering with regional pay-tv operators to help drive awareness and ease the subscription process.

By the end of 2018, three-quarters of Western European pay-tv subscribers had access to Netflix through their operator. Today, Netflix is the number one SVOD service in many Western European countries. For example, in the UK, where it has an agreement with satellite giant Sky and cable leader Virgin Media, 11.5 million homes subscribe, almost twice as many as for Amazon Prime Video. In France, where Netflix recently signed an agreement with pay-tv operator Canal+, it is also number one, with 6 million subscribers.

Pay-tv operators have helped Netflix overcome other market challenges. In the U.S., where it is already deeply penetrated, partners like Comcast are helping late-to-streaming consumers discover and easily sign-up for the service. In Latin America, operators like Telefonica in Brazil helps solve billing challenges for customers without credit cards.

Does Disney need pay-tv’s help with Disney+?

Disney+ is available on most popular TV connected and mobile devices. However, it is not yet available via pay-tv set-top boxes like Comcast Xfinity and Sky Q. Signs are that the decision to ignore pay-tv as a distribution partner is not hurting Disney in the least. Within a few days of the release of the service, Disney claimed there had been 10 million activations. Between November 12 and 24, Apptopia says there were 15.5 million iOS and Android app downloads.

Perhaps the excellent performance was to be expected. After all, Disney is the tenth most valuable brand in the world and has the eleventh most recognized logo. Unlike Netflix when it launched globally in 2016, Disney has a global brand that most people already know. So, mouse-house executives surely don’t need pay-tv’s brand exposure help. However, it could use pay-tv’s assistance in other areas.

Of immediate concern should be markets where credit card ownership is low. Netflix stumbled badly in Latin America over this issue. Pay-tv operators already have a billing relationship with customers and handle billing for Disney+ too. They can also take care of technical and customer support. As well, they can help make signing up and using the service easy for customers unaccustomed to dealing with Internet TV services.

For now, Disney+ is running as fast as it can to keep up with the extraordinary demand it has created. Once that surge subsides, expect Disney to look to pay-tv operators around the world to help it make Disney+ a success.

Why it matters

Pay-tv operators have helped Netflix establish its brand in markets where it is not well known.

They have also helped Netflix overcome several other critical problems too.

Disney+ doesn’t have a brand exposure problem but will still need pay-tv operators eventually if it is to be a success.


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