Disney is, quite simply, one of the biggest and most important media entities on the planet. This means that when the company does something, the rest of the world notices. This makes the announcement that Disney will be starting its own streaming service a really big deal. Recently, Disney CEO Bob Iger was asked why the company had made the decision to go in that particular direction. Iger explained that Disney felt the company had to do this, because the media business has made a significant shift in recent years, and it meant the company was going to need to be part of the change, rather than simply react to it. In Iger's words...
Well, we announced what we're doing is we're taking product out there direct-to-consumers, a sports product in 2018 and a Disney-branded product in 2019. And we're doing that because we experienced and see a huge disruption in the media business. It doesn't take a genius, I think, to conclude that the media business today doesn't look anything like the media business even five years ago. At some point, we felt it would be necessary for us to not only be disruptive but to disrupt our business ourselves. The decision to do that came when we felt we were no longer seeing a speedbump of disruption, which is basically something that occurs, changes things a bit and we react to it. What we were seeing instead was real, profound and permanent change.
It's certainly true that streaming options have changed the way that people watch TV and movies. Disney has certainly been part of that change as many of the studio's films and TV series can be found on current streaming platforms like Netflix and Hulu. However, Bob Iger's comments to Vanity Fair seem to go beyond that. He says that Disney saw that the new business model was going to be disruptive to the company, so the decision was made to get out in front of the issue and be the ones to decide how the business would adapt, resulting in a new service that will bring Disney product direct to the consumer starting in 2019.
The entertainment business is always changing but the advent of streaming does appear to be one of those big changes that impact everything. Movie studios were against the birth of the VCR because of the way it would impact the existing model of re-releasing films in theaters every few years. Eventually, the companies adapted and made home video, and then DVD and Blu-Ray, a part of a new business model. Now, it seems that streaming is the next big step, which will likely supplant DVD and Blu-Ray to a large extent. Disney could try to replace this revenue with licensing deals for the company's content on other services, or it could take the big step to replace it with regular subscription income.
Of course, if every media company comes out with its own unique service it might carve the content up a little too finely to be useful for many consumers. Although, with the history and the library that Disney has, there's a pretty good chance the new venture will be successful.
