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International expansion will make or break streaming TV services. Experts explain the challenges Disney, WarnerMedia, Starz, and others face.

  • Disney owes part of its early streaming success to its expansions into India and Western Europe — proving, as Netflix did, how crucial global audiences are in the streaming wars.
  • Business Insider broke down what we know about how the various legacy-media companies are expanding their streaming businesses internationally, and what hurdles they'll face.
  • Players including Disney and WarnerMedia will have to navigate pre-existing distribution deals and figure out which brands to peg their platforms to, experts told Business Insider.
  • Disney and its rivals are also learning that some streaming markets may be more valuable than others.
  • Visit Insider's homepage for more stories.

Disney Plus is winning the early race among legacy media's nascent streaming services with 60.5 million paying subscribers in its first nine months. A chunk of Disney Plus' growth this past quarter came from its combined offering in India with Hotstar, a locally established streamer, and growth in the prior period came partly from Disney Plus' expansion into Western Europe.

The international impact on the platform's early success shows how crucial global audiences are in the streaming wars. Netflix first proved this in 2017 when its international subscriber base overtook its US audience. International viewers still fuel Netflix's subscriber growth.

With streaming competition heating up in the US, Disney, ViacomCBS, and WarnerMedia shared in recent weeks new plans to expand their services internationally.

Legacy media will face challenges their tech rivals didn't when pushing overseas, experts told Business Insider, including navigating pre-existing distribution deals and figuring out which brands to peg their platforms to. But these players need to the lay out the groundwork now for what will likely be a long road abroad.

"We're talking about services that are only profitable at scale," said Eric Haggstrom, forecasting analyst at Insider Intelligence. "Growing user base and brand early on is very important."

Here's what we know about legacy media's international streaming plans, so far: 

  • Disney's Disney Plus is available in more than a dozen countries, and is pushing into the Nordic regions, Belgium, Luxembourg, Portugal, Indonesia, and Latin America later this year. The media company is also pegging to its Star brand an upcoming international streaming offering that will house Disney-owned content that isn't a fit for the family friendly Disney Plus, including ABC Studios, Fox TV, FX, Freeform, Searchlight, and 20th Century programming. No international plans have been announced for Hulu and ESPN Plus.
  • ViacomCBS's free, streaming-TV service, Pluto TV, has already expanded into parts of Europe and Latin America. The company is also planning to launch in 2021 an international streaming service that will feature programming from all its brands, including Showtime, starting in Australia, Latin America, and the Nordic regions.
  • WarnerMedia's flagship streaming service HBO Max is eyeing entry into Latin America, as Bloomberg's Lucas Shaw reported. The company has yet to reveal a timeline or concrete details on the expansion.
  • Discovery said it will soon announce a streaming service that will encompass much of it non-fiction programming, including HGTV, Food Network, and Animal Planet programming. Like its legacy-media competitors, it'll probably roll out stateside first, but few details have been revealed. The company also has US-based apps for some of its media brands, like its Food Network Kitchen subscription.
  • Lionsgate has been expanding its domestic pay-cable network Starz internationally through platforms like Prime Video Channels, internet providers like Orange and Vodafone, and direct-to-consumer apps. Its international direct-to-consumer service, StarzPlay, launched in the UK, France, Germany, Brazil, and Mexico last year, and is slated to launch in 20 more territories this year. Through a joint venture, the Starz brand also streams in the Middle East and North Africa with StarzPlay Arabia. 
  • NBCUniversal plans to expand Peacock internationally but hasn't yet shared details.

Disney and WarnerMedia are constrained by their legacy operations in ways their tech rivals aren't

Apple TV Plus demonstrated the advantage tech companies have in streaming when it launched in November, around the time Disney Plus debuted in a few countries, in more than 100 territories around the world.

As a tech company, Apple had the infrastructure in place to move into much of the world overnight. 

Disney is building that infrastructure, but it's also encumbered by pre-existing international licensing deals in ways Netflix and others streamers aren't.

Since Netflix started releasing originals, it has hustled to secure the global rights to that content where possible, while also distributing or coproducing local projects, such as India's "Sacred Games," Spain's "Money Heist," and the UK's "The Crown," to appeal to audiences around the world.

"Netflix did a lot of things right, particularly in terms of reaching out to local directors and producers to make sure the programming they're making is appropriate for the market," Alan Wolk, analyst at TVREV, told Business Insider. "That was a great lesson for everybody else on how to roll things out internationally."

Before Disney follows Netflix down that road with its forthcoming international streaming service, it'll have to claw back the rights around the world to its own programming, such as ABC's "Grey's Anatomy" or Hulu's "The Handmaid's Tale," which air and stream on local channels in the UK and other parts of the world. 

"The biggest issue in general for these services is they've already sold a lot of their content into longterm deals internationally," Haggstrom, the Insider Intelligence analyst, said.  

In the UK, Comcast's Sky airs and streams shows from both WarnerMedia's HBO and ViacomCBS's Showtime. Some HBO and Showtime shows also stream in India on Disney's Hotstar. That doesn't mean WarnerMedia's HBO Max and ViacomCBS's forthcoming streaming service can't expand into the UK or India. But it does make their entries a tad more complicated.

Legacy media had to deal with this before launching in the US, too, by the way; Disney, for one, had to retrieve the rights to the Star Wars films for Disney Plus.

HBO's existing distribution deals may be part of why HBO Max is looking to Latin America first. WarnerMedia CEO Jason Kilar, who was the founding CEO of Hulu, knows how crucial it is for streaming services to get their international rollouts right. Hulu pushed into Japan, but never expanded more broadly. Netflix, on the other hand, aggressively pursued international expansion, and overtook Hulu's audience by a wide margin.

"I'd say it was a mistake, and one of my biggest regrets was not being able to persuade the board of Hulu to go international," Kilar told Bloomberg's Lucas Shaw in August.

Netflix had 193 million subscribers as of June, where Hulu has 35.5 million.

Some international markets may be more valuable than others as legacy media charts its streaming expansion

As legacy media expands streaming internationally, Disney, ViacomCBS, and others will also need to consider which markets are the most lucrative.

Netflix started reporting its financials by international region this year, which gives more insight into streaming markets globally.

The US and Canada, and Europe, the Middle East, and Africa, bring in the most revenue per paying subscriber. In regions like Latin America and Asia-Pacific, Netflix's average revenue per subscriber has declined as its audiences have grown.

Disney Plus' average revenue also dropped last quarter to $4.62 because of its price point in India, where it launched as part of the bundle with Hotstar. Excluding Disney Plus Hotstar, the service's average revenue was $5.31 per paying subscriber, the company said.

"Netflix is a major player in all those markets," Haggstrom said. "The newcomers are going to have to look at, how concentrated is the market? And what is the revenue opportunity in the market, both in terms of ads and subscription options?"

Some markets, like India, may be more accepting of ad-supported services if it keeps down the costs of subscriptions, Haggstrom said.

Starz first established its brand internationally in the Middle East and North Africa, through its joint-venture, StarzPlay Arabia. After the service gained traction — and Starz was acquired by Lionsgate in 2016 — Starz starting expanding in 2019 its own StarzPlay offering in parts of Europe and Latin America, as a home for Starz dramas, Lionsgate movies and TV shows, and premium programming licensed from third parties. It plans to push into more territories this year.

Lionsgate said it had 11.4 million streaming subscribers globally as of June, including StarzPlay Arabia and the Spanish-language service, Pantaya.

Legacy players are pegging their services to their strongest international brands

Legacy streamers like Disney may have advantages moving into international markets where their brands are well known.

Disney is a behemoth at the international box office with Marvel, Disney, and other films, and has international touchstones through its theme parks in Europe and Asia. Warner Bros. and DC films are also big at the global box office. ViacomCBS has an international TV footprint, as well as its movie studio, Paramount. And Lionsgate's Starz, which had been licensing programming to TV networks around the world, has found success bringing its brand name to more parts of the world.

The challenge for these legacy players then becomes which brands to peg their streaming services to. In some cases, it means making tough choices.

Disney is putting Star, which is more established in Asia, at the forefront of its international general-audience service, and not Hulu. Hulu has a robust streaming audience in the US, but it's virtually unknown outside of the country.

"Hulu also, I must say, has no brand awareness outside of the US and nor does Hulu have any content that's been licensed to it internationally," Bob Chapek, Disney's CEO, said on the company's latest earnings call.

Wolk, the TVREV analyst, also pointed to Hulu's roots as a joint venture between major US broadcasters as a possible reason for its stalled international push. 

"I suspect the name Star is more Disney-ish than Hulu," Wolk said. "They're still in the process of Disney-fying Hulu."

ViacomCBS, meanwhile, has yet to name its upcoming streaming service, but said it will feature both CBS and Showtime content. It's likely that one or both brands will have to play second fiddle to the broader streaming brand.

"It may be that some of the content is valuable but it doesn't have much brand equity," Haggstrom said of brands like CBS. "This is something that all these companies are going to have to deal with."

Disclosure: Mathias Döpfner, CEO of Business Insider’s parent company, Axel Springer, is a Netflix board member.

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