Analysis: Sky to seal the Disney+ deal
By Alana Foster2020-01-28T17:09:00+00:00
Sky rumoured to sign exclusive deal for Disney+
Analysts agree a win for Sky is also a win for Disney
Content aggregation and collaboration is key
Sky Q: Sky customers signed up to the set-top box service will have the option to opt into Netflix's basic plan which is priced at £5.99
An exclusive streaming deal between Sky and Disney is reportedly close to a conclusion, potentially shaking up the UK direct-to-consumer OTT landscape.
Under the multi-year partnership, the UK broadcaster's customers will gain access to a slate of Disney titles, including Toy Story, Marvel movies such as The Avengers and Disney Classics like The Lion King on the Sky Q platform.
It is expected that Disney+ will launch on the Sky service alongside its wider British debut on 24 March.
Sky's move to acquire Disney+ content will ensure its customers have access to the newest streaming service within a bundled subscription.
The agreement, reported by The Sunday Telegraph, is expected to be similar to Sky's partnership with Netflix, which was renewed last week.
Under the Netflix agreement, Sky customers signed up to the Sky Q set-top box service will have the option to opt into Netflix's basic plan which is priced at £5.99.
This deal will be the latest distribution agreement Comcast-owned Sky has inked as it looks to ensure its subscribers have access to a range of content amid the crowded landscape.
The company signed an integration arrangement with BBC iPlayer last November and has extended its programming deals with Channel 4, Channel 5 and Warner Media.
Read more: Disney unveils European launch dates for Disney+
If the reports come to fruition, it will be a huge win for Sky as it prevents its rivals BT and Virgin Media from fully integrating the Disney+ service with other programming. However, they would have the ability to carry the Disney+ app.
According to The Telegraph's report, EE is also hoping to bundle Disney+ subscriptions with selected mobile contracts.
Demand for Disney bolsters
The highly anticipated Disney+ service has already been dubbed the vanguard of new streaming services and is set to compete for global viewers with its legacy and original content its trump card.
While Netflix has ruled the streaming video world for the last few years, Apple, Disney and HBO are shaking this up, looking to claim eyeballs and revenues from the millions of subscribers already engaged with Netflix, hoping talent, legacy and original content will sway loyal viewers.
Read more: 2020: The year of the OTT
UK viewers will be able to watch Disney+ from March
Source: Ivan Marc Shutterstock
Speaking to IBC365 PP Foresight analyst Paolo Pescatore says: "Make no mistake, this is a big deal and a big coup for both parties. Sky is the dominant pay-TV provider in Europe and Disney brings the most sought-after breath of premium programming for all genres."
If the deal is successful there will be no doubt of Sky's competitive position in the UK market. Having secured exclusive deals for high end TV and film, Sky will remain a household choice for content bundling, particularly after it extended its pay-TV rights deal for Warner Media's HBO programming last year, as well as Netflix last week.
However, the impact of this deal among broadcasters and pay-TV operators "hinges on whether Sky's carriage of Disney+ is exclusive or not," explains Enders Analysis senior analyst Tom Harrington: "Carriage of Disney+ on pay-TV platforms is an integral part of Disney's strategy as pay-TV homes are more likely to sign up for streaming services."
Sky is yet to confirm the deal or release any details to the public of its terms, but it's worth noting that in France Disney has signed a deal with Canal+ to become the exclusive distribution partner, beginning 31 March.
Harrington adds: "To get scale fast before the streaming market settles and signing up new subscribers becomes even harder and more expensive you need carriage via pay-TV, just like Netflix has been doing for years.
"Sky has been losing exclusive rights to first-run Disney films due to the launch of Disney+, so given that Disney+ doesn't look like being exclusive to Sky, Sky is losing out somewhat."
The pending deal, however, will undoubtedly take this into account and will see Sky as an advantageous option to Netflix.
Picking up the pieces
As the streaming market fragments the power is shifting to OTTs, yet who will become the future favourite remains uncertain.
Pescatore adds: "There are too many players chasing too few dollars and eyeballs.
"Content aggregation is paramount in bringing together a seamless offering for TV viewers and it is still all about great content and distribution.
"Sky is home to great premium content and the biggest retail channel in the UK."
A sustainable model for streaming video services seems that consolidation among the big players will have to continue for the ecosystem to thrive as it is.
Harrington explains: "Where or how they do that is anybody's guess but at the moment the likes of Sky, Amazon and Apple are making their platforms as strong as possible to make themselves destinations for content."
Read more: Apple bites into the streaming market
It's no surprise UK operators are keen for a piece of the Disney pie, given the value of its film which dominates the international box office, however, IBC365 asks if this could impact Disney's strategy to infiltrate eyeballs and secure subscribers?
Pescatore believes it won't affect its larger plan because Disney needs to follow the likes of Netflix in securing telco and pay-TV partnerships in Europe.
"Sky is a big distributor and one that makes sense in terms of exclusivity. Combined, it represents a great way to entice subscribers and drive engagement."
Frozen 2 is one of the Disney cartoons that could be available to Sky viewers if a deal is confirmed
On the other hand, Ampere Analysis research director Richard Broughton says it certainly could impact depending on how the deal is structured.
"If the deal is exclusive (i.e. the only way to get Disney+ is through Sky), it would have a three-fold impact.
"One – lower financial risk for Disney, as an exclusive deal would almost certainly be associated with a fee from Sky to Disney to cover the value of the exclusivity. Two – rapid early adoption through upsell via Sky, and three – lower mid-term growth as Sky-only availability limits the addressable market."
He explains the likely outcome would be a straight exclusive deal for Sky or no exclusivity.
"A half-way house of exclusivity on Sky, no availability on BT and Virgin, but availability on other connected devices would be possible, but unlikely in my view because BT and Virgin would protest this, and the value for Sky is diminished."
Needless to say it's a complicated guessing game until the terms of the deal are confirmed, but certainly an important time for the UK's D2C market.
Read more: Disney bets big on the streaming revolution
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