As Disney nears the launch of its own streaming network, Disney+, next month the company is blocking Netflix ads on Disney-owned networks ABC and Freeform, says the Hollywood Reporter. It sounds like Disney will still allow Netflix ads on ESPN, perhaps because there is no competing content between the two companies. Disney-owned network FX will not be affected, because FX did not accept Netflix ads prior to this change.
Though most streaming video services dont have the $1.8 billion ad budget Netflix has, they are in a similar situation with Disney calling the shots on what it will and wont allow.
“The direct-to-consumer business has evolved, with many more entrants looking to advertise in traditional television and across our portfolio of networks,” a Disney spokesperson said in a statement. “While the initial decision was strictly advertising-based, we reevaluated our strategy to reflect the comprehensive business relationships we have with many of these companies, as direct-to-consumer is one element.
Why would Disney make such a move? To tighten the screws a bit as the direct-to-consumer video space adds more competitors. Disney is, of course, launching its own streaming service in November. Like Netflix, Disney+ will be commercial free. On day one, Disney+ will offer 300 movie titles with another 200 being added during its first year. It will also include more than 7,500 episodes of Disney-owned or licensed TV programming.
Along with a library of new and classic Disney films, Disney+ will offer Star Wars, Marvel and Pixar flicks to its library. Disney+ will be the repository for new Disney and Disney-owned programming, but some classic films and other Disney-owned content have licensing agreements to fulfill before they can make the move.
For those who order Disney+ solo, they will pay about $7 a month. For those who want an extra special deal, they can subscribe to a Disney bundle which will include Disney+, ESPN+ and the ad-supported version of Hulu) for $12.99 a month, a savings of $5 a month if a subscriber purchased each service individually.
Other competitors will be joining the direct-to-consumer streaming video fray in the coming months – Apple will launch Apple TV+ in November, NBCUniversals Peacock is set to launch in April, and AT&Ts WarnerMedias HBO Max is slated for some time in 2020. Differentiating factors for these services is content, price and user experience. People will subscribe to the services that offer their favorite shows, fall within their preferred price point, and offer the experience they want (pay less but willing to tolerate ads or pay more for a commercial-free service, mobile-friendly, easy to navigate, watch on multiple screens, etc.).
However, the key to showing consumers what is available on each service is getting in front of those customers – often through advertising. According to its second quarter financial report, Netflix is not relying solely on advertising to get in front of customers. The company is building licensing and brand partnerships to tease fans with the launches of upcoming shows and fan favorites like Stranger Things, in which they partnered with Coke, Nike, Burger King and Baskin Robbins.
Netflix is also developing partnerships with internet and mobile providers such as Comcast, DISH, Verizon, T-Mobile, Charter, Altice and AT&T to offer Netflix on mobile devices and set-top boxes. Owned and earned media are other opportunities for Netflix to share their message, to avoid the Disneys ad blockage.
Will this have a huge impact on Netflix? It probably has changed the streaming giants fourth quarter advertising plans, depending on when the blockage goes into effect. However, Netflix is an experienced company with a new, eager-to-succeed chief marketing officer at the helm. As noted above, the company will find creative ways to get in front of fans, and if what Netflix isnt doing is not working, theyll adapt and adjust to the changing market conditions. The company is savvy about its competition and probably saw this coming.