| posted by

Disney wants to sell products directly to consumers – but says it won’t displace third party retailers

Disney wants to build out its e-commerce offering in an attempt to fully monetise the popularity of brands like Star Wars and Marvel.

The house of mouse has a sprawling media empire but there’s one area it thinks it’s lacking – direct-to-consumer channels. Outside of the Disney stores and its theme park business, customers typically buy though third parties like Amazon and Tesco. And while the company’s chief executive Robert Iger assured analysts on an earnings call last night (5 November) that “there’s nothing wrong with that” he wants the business to evolve with how people are consuming content.

“We're also very interested in taking product directly to consumers as a company,” he continued.

“We're thinking about the consumer and the consumer today is a different consumer than before. They don't just want to sit in the living room on a couch and watch our product on a fixed screen on the wall with a remote control in their hand. They want to do it in many more ways, and they have the authority thanks to technology to make those decisions.”

It’s why Disney is already looking at a number of alternative ways to distribute its content. One potential major channel is DisneyLife, a Netflix-style app it’s launching later this month that will offer hits from Frozen to Toy Story for a monthly fee of £9.99. Thousands of TV shows, songs books and games are also bundled into the service, which is using the UK as a test to see how people respond to having much of its content accessible online.

“We're launching in the UK for a variety of reasons,” revealed Iger. “It's a strong Disney market with huge affinity for the Disney brand and so we wanted to test this in the market.”

The other reason is that there’s more flexibility in the UK to push its own content due to its deal with Sky, whereas in other regions existing deals “encumber” it from doing so. “It used to be you don't keep a consumer happy; now it's you don't keep a consumer, because they have other choices.”

Iger also explained the thinking behind launching an app instead of a web service, claiming that the “app experience tends to be far more rich and textured and a better user interface”. Disney’s boss went on to admit that the company is not yet ready for a full scale internet offering and so the arrival of the DisneyLife app could offer up the insights needed for an eventual transition.  

Beyond that, there’s the issue of the declining rate in the cable TV subscriber base, particularly in its heartland. Disney’s sports network ESPN has lost over 3.2 million cable subscribers in the past year alone, compared to 7.2 million over the last four years. That’s nearly half of the total number of subscription losses in 2015. Like other American media owners, Disney is exploring how to recalibrate itself for the live streaming market and more direct-to-consumer initiatives could help retain customers.

Despite the losses, Disney’s latest quarterly results allayed any immediate concerns about cord cutting. The business saw revenue jump nine per cent in the fourth quarter to $13.5bn, and Iger said it would continue to license its most popular networks to new services like Sony Playstation’s Vue with smaller bundles that are more affordable for young people.   

Elsewhere, there’s the small matter in a galaxy far far away that the company has high hopes for. Ticket sales for the latest instalment in the blockbuster franchise – The Force Awakens – are cause for excitement according to Iger as well as the buzz for videogames like Star Wars Battlefront and a plethora of tie-in merchandise. 

Featured by The Drum