Disney Boss Bob Iger On OTT Strategy: Sports Tiers, More Originals

Speaking at the Morgan Stanley Technology, Media & Telecom Conference, Disney chief Bob Iger elaborated on the company’s ambitious OTT plans, saying the launch of ESPN Plus a month from now will signify the beginning of a key cycle for the company.

The topic dominated the 40-minute session. Disruptions to the TV ecosystem, Iger conceded, have had a “faster and a more profound impact than we ever expected.” He said the rollout of the company’s two apps will enable Disney to. “participate in the very business that is doing the disrupting.”

The launch of the long-awaited ESPN Plus, expected in late March or early April, offers a version of the sports network for $4.99 a month, as Disney disclosed this month on its quarterly earnings call. Describing that price as “reasonable” given the less-than-platinum offerings at launch, Iger said plans call for tiered pricing as OTT rights to top-tier sports are solidified.

“I imagine you’ll see that price rise for the augmented service,” Iger said. “We have the opportunity to enable customers to buy seasons, teams, weekends.” The ESPN Plus app will also enable sales of Major League Baseball and National Hockey League out-of-market packages, he added.

Iger said the nurturing and development of the app will remain a long-term priority for the company. “Over time, our intention would be for that app to be the app that people experience ESPN on,” he said, “but we’re going to manage the migration of that very carefully because right now we have a business — the multi-channel business — that is serving our company quite well.”

Also as discussed on the quarterly call, Iger said the studio output of four to five original series and another four to five original movies will head to the Disney entertainment OTT service for its planned launch in late 2019.

“We’ll see how that goes and we’ll have a better sense of what kind of volume we can provide after the Fox transaction closes,” Iger said. Once regulators have signed off, which Iger maintained is a given, the combined company will look to mobilize OTT exclusives from National Geographic and other brands.

While the emphasis on stand-alone, direct-to-consumer services risks alienating MVPDs, Iger acknowledged, “A number of them have already contacted us saying they are interested in distributing the app, even if it means slightly lower margins for them … it is a reality.”