In a previous article I described how D2C (Direct to Consumer) streaming services may be used to boost other revenue streams; Apple to boost hardware sales, Amazon to boost e-commerce, and Disney to boost merchandize sales (let’s leave Netflix for now). But Disney content already being available on a wide range of streaming platforms, why would Disney go D2C and turn off all other distribution platforms exposing their content?
Unlike Apple and Amazon, trying to boost other revenue streams by entering the streaming market, Disney has been a content owner from the start. And for a very long time they have been earning well on other revenue streams with their content as “commercials”. See my previous articles on this topic. As their content portfolio has been available on all video distribution platforms, why would they go D2C when they already have a massively wide “merchandise commercial” exposure?
Two Main Reasons for Disney Going D2C
Today I see two major reasons for Disney going D2C; distribution control, and the direct customer relation.
Disney being available on all video distribution platforms comes with a major downside; Disney has less control over how their content is being distributed. Going D2C secures Disney recovering control.
Looking at different markets/countries/regions, some have more evolved distributors while other markets have a higher OTT D2C penetration. Disney going D2C and owning the distribution alternatives means that they may choose which of the two alternatives, or a combination of them, they want to use to reach as many consumers as possible.
In France, where the market has matured more around distributors, Disney chooses to sign a distribution agreement with Canal Plus. Looking at Sweden OTT D2C alternatives have grown very strong with Netflix, HBO and others. Going D2C here may be the winning distribution model. But this is my personal guess and remains to be seen.
We will definitely see more of these distribution agreements being announced, as well as other markets where Disney go D2C only.
Direct Consumer Relation to Call for Action
Commercials have always been about bringing awareness to potential consumers. Be aware of how white your teeth get with the best toothpaste, or how clean your dishes get with the best dishwasher detergent. Disney’s content on any distribution channel has been just the same; bringing awareness and hoping that the sale will happen. But with the new technical platforms we can take the use of commercials further than just awareness. New technology brings the direct consumer relation enabling the call for action.
Instead of just making the potential customer aware of a product offering, the call for action is about triggering the customer to making purchases. And keeping customers loyal. In the new Disney+ platform, you may get better deals for your local Disney on Ice tickets, sign up your kids for a pre-screening of a new Disney movie, or even better deals on the clothing appeared in the Disney movie you just watched. And the purchase is simplified; in your direct relation with Disney you have already signed up with your credit card details for quick transactions. Premium memberships with free perks are just around the corner.
The Direct to Customer Trend
The going-direct-to-consumer trend that we see in the streaming industry is not unique. The past two decades companies like Facebook and Google have shown the true value of personal data, leading to businesses having been targeting to own the customer relation. All sorts of businesses have become successful by squeezing in the middle between the producers and the consumer. See Uber, Hotels.com, or any travel ticket sales company. After having understood the value of the direct customer relation, the product/service provider’s response has been own loyalty programs, better service to direct customers, and lower direct prices. Test it yourself by booking your hotel direct next time.
Owning the customer relation is truly invaluable as it enables the call for customers to stay loyal buyers.
Eyevinn Technology is the leading independent consultant firm specializing in video technology and media distribution. And proud organizer of Streaming Tech Sweden.