Walt Disney Co. must expand its content catalog to expand its international market like in Asia, according to a TV and film content expert.
It was reported that Walt Disney Co. plans to spend $33 billion for content in 2022 but in order for its OTT streaming service Disney Plus to capture the Asian market like what Netflix did, it has to localize content.
This is according to Ian McKee, an expert in the TV and film content space. McKee is the founder and CEO of Vuulr, a global online content marketplace for film and TV rights that connects buyers and distributors worldwide.
Vuulr currently has over 30,000 unique films and TV titles available on its platform, amounting to more than 173,000 hours of content from 7,000 sellers in over 120 countries and spanning over 90 languages -- offering buyers a convenient, single destination for content discovery and acquisition.
McKee provided Manila Bulletin with his insights on what Disney should do to expand its international market including in Asia.
1. How can Disney Plus penetrate the Asian markets and take on more local streaming platforms?
Mckee: The short answer is it comes down to the localization of content catalogs to raise the appeal of Disney Plus in these markets. It’s that simple.
There’s a second more strategic aspect to consider, though. Many of the local streaming platforms that Disney and Netflix have to compete with for audience have gone with an A-VOD model.
In many Asian countries -- especially those with larger populations like Indonesia and Vietnam -- card usage (Credit or Debit) is low. For example Indonesia has upwards of 270 million people but less than 10% have cards, Vietnam with its 100m population has a similarly low card penetration . So, for the majority of the population in these countries, signing up for an S-VOD platform like Netflix or Disney Plus the means of collecting payment for the subscription is a barrier for audience acquisition, whilst the local A-VOD platforms don't have this hurdle.
2. Disney Plus’s strategy from day one has been to provide fans with content exclusively made by them, but should Disney consider adding titles that are not made by their production companies?
Mckee: Yes -- and they’re already doing this. Not everything Disney puts on Disney Plus was made by Disney. They need to do more of this, though. Especially when they’re rolling out globally, Disney needs to localize catalogs. It is much faster and more cost effective for Disney to license content than it is to go out and fund its production. In order to give Disney the breadth, depth and diversity of content it’s seeking -- and at a rapid speed -- licensing content is critical.
3. How much of that $33 billion should Disney spend on non-American content? Asian content specifically?
McKee: Many studies seem to point to a situation where Disney’s home market is reaching the point of saturation and subscriber fatigue is setting in for people not wanting to sign up for yet another streaming platform. Netflix is seeing its growth come from international, and Disney needs to follow suit. Netflix has reportedly invested $500 million in Korea alone to acquire and produce content. Disney must prioritize building its content catalog in the regions that they are targeting for growth as well.
Disney should think about its content strategy based on its objectives for growth international versus domestic. For example, if they want 60 percent of their growth to come internationally, they need to allocate their spend to support this and acquire international content that will appeal to an international audience. It’s going to be much more effective for growth than continuing to solely produce American content and expecting that to lead to new subscribers across the outside of America.
We’ve seen the massive success that Korea presents which started with “Parasite” and “Squid Game,” and now “Hellbound,” so that certainly gives a clue. But it’s not just about looking for content that travels globally. It’s also looking at the preferences of consumers abroad. For example, in Asia that would mean including a mixture of Mandarin dramas, Korean dramas and Bollywood as most households Asian countries want to watch a mix of those types of content as well as their own domestic and American content.
4. Many streaming platforms have shown success with original content, Disney Plus, for example, having success with titles such as The Mandalorian. How will more original non-American content benefit Disney’s need to expand its reach and grow its subscriber base?
McKee: It’s not necessarily a question of whether the content is American-made or non-American, or produced (original) or licensed, that determines a piece of content’s success -- it’s all about the quality of the content. If we look at examples like “Money Heist,” which was Spanish-made original content, or “Narcos,” which was made by the French studio Gaumont Television, both were massive successes. The same goes for “Squid Game.” So Disney shouldn’t completely focus on whether it's American or International content, that’s less important. Disney needs to prioritize offering exceptional content, some of it produced internationally, and some of it licensed internationally.
5. Disney is outspending Netflix but falling short when you compare the overall reach of the two platforms, what must Disney do in the upcoming year to change that?
McKee: First, bear in mind that Disney’s $33B is also distributed over sports and films, the latter (especially the blockbuster franchise films) are more expensive to produce than TV content on a per hour basis.
Secondly, bear in mind that Disney’s film releases have to trade off the agenda of theatrical distribution and that of their streaming platform. Having to make this trade off puts Disney at a disadvantage to Netflix. Netflix has a single agenda -- the success of its streaming platform.
With metrics being a talking point at the moment and Netflix talking about minutes streamed we can also see how the measurement framework affects the product. Take “Bridgerton,” as an example, at a production budget of $60m for Season 1. It provides 8 hours worth of streaming minutes vs a film produced for the same budget which provides just 1.5 hours worth of streaming minutes. So clearly making successful episodic/TV content is more valuable for an S-VOD platform than a film when measured by engagement or minutes streamed.
A related aspect is how the mix impacts churn. Research shows that people can spend up to 15 mins searching on a platform (a frustrating experience) before deciding what to watch next. Having found that title, if it is a film, that person gets 1.5 hours of entertainment before having to start the search process again vs if that title is an episodic with 10 hours of watch time before the next search. The net effect is that platforms with more emphasis on film vs episodic are likely to have a higher churn rate.
Hence, not only because Disney is in catch up mode, but also because, with its competing agenda, Disney needs to spend more because, unlike Netflix, its spend is not focused purely on supporting its S-VOD service.