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15 November 2018

Disney+, T-Mobile could complement each other’s grand plans

Disney executives finally agreed on a name for the company’s unborn streaming service, canning Disney Play in favor of Disney+ late last week. Shortly afterwards, details on T-Mobile’s uninspiring TV plans to launch by the end of this year were leaked in an FCC filing, while its mobile-first successor will launch around the same time as Disney+. Is there any wiggle room for a collaboration here or are the two destined to be at loggerheads?

CEO Bob Iger also said Disney could buy the extra 40% in Hulu it does not already own (30% from Comcast and 10% from WarnerMedia), while it will inherit 21st Century Fox’s 30%, giving Disney a current 60% controlling stake in the streaming firm.

First of all, the unveiling of Disney+ as a super-fan-targeted streaming service has sparked plenty more excitement than T-Mobile’s revamped Layer3 TV hardware leak, with documents showing images of an ethernet-connected mini set top. Although as we noted last week from T-Mobile’s results coverage, CEO John Legere essentially warned us not to expect a disruptive video offering until next year.

T-Mobile has no content. Disney has no technology. Well, admittedly some technology does reside in the house of mouse with BAM Tech, but seemingly lacking some of the crucial ingredients required to build a disruptive OTT video service. It may sound an outlandish idea, yet the combination of T-Mobile’s network infrastructure, particularly if the uncarrier successfully takes over Sprint, with the content clout of Disney plus Hulu, is one of only very few ways Disney+ could conceivably strike even the smallest of challenges to Netflix.

All we have for now is a name and news of a second Star Wars action series. Other outlets believe the Star Wars franchise alone is enough to give Reed Hastings restless nights. That simply isn’t the case in today’s market.

Years ago, the prospect of operators partnering with Netflix was seen as unthinkable and now every tier 1 operator, even unlikely candidates like Sky in Europe, has conceded. A similar pattern could emerge following the launch of Disney+, while an exclusive tie up with T-Mobile could offer something quite unique and give T-Mobile access to the crucial content component it needs to sell 5G fixed wireless access subscriptions and indeed squeeze more money from the mobile business. T-Mobile execs pointed to such a strategy only two weeks ago during T-Mobile’s third quarter earnings filing which flew below the radars of many industry publications.

We reported on how the operator’s long-term strategy is to dress up the overhauled Layer3 TV as the best and only TV service purpose built for 5G and use this to sell fixed wireless broadband; not the other way around. “For us to be able to be there, serving people’s homes with 5G broadband, we need to have an incredible 5G TV service,” said T-Mobile COO Michael Stievert. We also said how T-Mobile splashing big on a studio asset, as rivals have, is unlikely given its financial commitments to network buildouts and the pursuit of a merger with Sprint.

Therefore, partnerships could open a back door into content for T-Mobile, offering say an extra month’s free access to Disney+ either for existing mobile subscribers (of which it has 77.2 million), and then free for new 5G FWA subscribers whenever the service launches. If Legere can live up to his ambitious promise of reaching 90% of the country with a new broadband service by 2024, then things get a little more interesting.

Iger elaborated some more on content plans this week, saying Disney+ will include Disney Pixar, Marvel, Star Wars and National Geographic. He also said ESPN+, its sports streaming service which launched earlier this year, now has 1 million subscribers.

“We certainly would be interested in buying Comcast’s stake. But with 60%, which is what we will own, we’ll have enough control to manage Hulu in a way that is consistent with the strategy the company is deploying,” said Iger, adding that content investments and global growth are two priority areas for Hulu going forward.

As for T-Mobile, images of its internet-connected Mini set top were spotted by Variety in an FCC filing from manufacturer Kaon Media, Layer 3 TV’s previous set top supplier, featuring 802.11ac WiFi and Bluetooth LE. So it’s as expected, a slightly updated Layer 3 service to launch before the year is out, setting the stage for a mobile-first video drive late next year.

T-Mobile said in a statement to Variety, “We’re hard at work on our new home TV solution, and after launch, we’ll continue to innovate and expand T-Mobile’s entertainment solutions over time.”

Meanwhile, Netflix CEO Reed Hastings weighed in with his take on Disney+. “We’ve been competing with Amazon for more than 10 years, so we’re used to healthy, strong competition. It makes us better,” said the Netflix boss.

It was also revealed this week that Netflix will start lowering its prices across Asia Pacific (see separate story in this issue), something we have been calling for ever since it debuted in the region to mixed reception. For now, Netflix has only said “some countries” will receive a lower priced tier, meaning it could move from a premium foreign product to disrupting local streaming services which typically cost between $2 to $5 a month.