Television may never be the same.
After two years of planning, the Walt Disney Co. on Tuesday finally launches Disney+, the much anticipated streaming service that marks one of the Burbank company's biggest gambles to date.
Disney has spent more than $3 billion on technology and content in an ambitious bid to take on Netflix at its own game. The $6.99-a-month service boasts a deep library, including movies and TV shows from Pixar Animation, "Star Wars," Marvel Studios and classic Disney fare.
"Disney is approaching Disney+ with guns a-blazing," said Patrice Cucinello, an analyst with Fitch Ratings in New York. "It's an aggressive effort: They want to be one of the top choices for consumers seeking entertainment."
The new product represents a shift in Disney's business strategy and potentially, another blow to the traditional pay-TV bundle that has been so important to its business. Cord-cutting is on the rise, taking a big bite out of revenue to Disney's cable sports empire, ESPN, and other channels.
The new streaming option could entice more people to cancel their pay-TV subscriptions, further jeopardizing the health of an important profit center -- the fees that cable and satellite TV operators pay for programming. Nearly a quarter of U.S. households are expected to drop traditional TV subscriptions by 2022, according to research firm eMarketer. The number of people in the U.S. who stream video through subscription services is expected to reach 205.6 million in 2023, up from 182.5 million this year, according to eMarketer.
Disney faces formidable competition from rivals including Netflix, which has a big head start with 158 million subscribers and is spending about $15 billion on content this year.
But Disney Chairman and Chief Executive Bob Iger fervently believes that the companies that forge strong relationships with consumers will be the ones that survive the digital migration. His legacy will be judged, in large part, on the success of Disney+.
"With the launch of Disney+, we're making a huge statement about the future of media and entertainment and our continued ability to thrive in this new era," Iger told analysts last week.
The 96-year-old company's push into direct-to-consumer entertainment was a primary driver of its biggest acquisition ever, the $71.3-billion purchase of much of Rupert Murdoch's 21st Century Fox. That deal closed in March after a bidding war with rival Comcast Corp., resulting in months of haggling that ultimately drove up the price that Disney had to pay for the Fox assets, including control of streaming service Hulu, the National Geographic channels and ownership of "The Simpsons."