Disney Joins Sony's Vue Streaming Service
November 05 2015 - 12:10PM
Dow Jones News
Walt Disney Co. said it signed a deal with Sony Corp.'s
PlayStations Vue streaming video service to carry all of the media
powerhouse's channels, including ESPN and ABC, and smaller channels
like Fusion and Longhorn Network.
The deal includes an "extensive" on-demand library from Disney
and will, for the first time, offer the company's channels over the
Internet on a "multi-stream" basis—meaning that more than one
person in a household can stream the programming at once. Disney's
first Web TV distribution deal, struck with Dish Network Corp.'s
Sling TV, only allows for one stream at a time.
The companies did not specify a launch date.
Disney was a longtime holdout to Sony Vue's service, even as
other media heavyweights like Comcast Corp.'s NBCUniversal and Time
Warner Inc. signed on.
Some executives inside Disney had worried that Sony didn't have
a clear vision about which market segments it was targeting.
Indeed, when Sony started offering service at prices comparable to
what traditional cable TV costs today, it became clear the company
was seeking to pick off some of the highest-value customers who are
paying for cable already. The Sony Vue's entry-level price is $50 a
month, but users must also purchase broadband access to use the
service.
Meanwhile media companies like Disney have been more interested
in attracting cord-cutters or so-called "cord nevers," the younger
generation that has never paid for cable, than simply causing
share-shifts from traditional distribution partners to new
entrants.
The two sides came to terms as Disney was able to negotiate more
favorable packaging of its content to reach a compromise with Sony
on price, people familiar with the company's thinking said. ESPN,
ESPN 2, Disney Channel, ABC and ABC Family will appear in Sony's
basic cable package, and other channels like Disney XD and ESPN U
will appear in the package that goes to second-highest penetrated
tier of channels among Sony customers.
Disney also was able to negotiate that the channels in the
second tier would have to reach a certain percentage of Sony's
subscriber base, the person said. In addition, Disney negotiated a
minimum guarantee of money, regardless of how many subscribers Sony
adds, the people said.
Disney also found the Sony Vue interface appealing, especially
since its apps like WatchESPN garner high engagement on gaming
consoles, one of the people said.
Disney reports earnings on Thursday after the markets close. In
August, the company caught investors by surprise during its
quarterly earnings conference call when it lowered profit guidance
for its cable unit and said it was experiencing subscriber losses.
That stirred fears that pay TV cord-cutting is starting to take a
toll on media companies -- even one like Disney whose cable
business led by ESPN has, until now, been pretty much
invincible.
Investors will be watching Thursday for signs of whether those
trends have continued.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 05, 2015 11:55 ET (16:55 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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