Disney+ service goes live, setting up showdown with Netflix

Walt Disney Co. launched its much-anticipated Disney+ platform early Tuesday morning, embarking on an effort to turn a nearly century-old entertainment giant into a streaming leader.

The service became available for at least some users sometime after 1 a.m. New York time, earlier than the 6 a.m. launch that had been touted in a countdown clock.

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Disney is entering a market already crowded with heavy hitters, including Netflix, Amazon.com and Apple. And more rivals are diving in soon, such as AT&T and Comcast next year. The world's largest entertainment company thinks it can seize the day with a product packed with the company's best movies and TV shows, including "Star Wars," Marvel and Pixar films, as well as its library of some 400 children's movies.

"I feel great about what we've done," Chief Executive Officer Bob Iger told a roomful of reporters last week. "I love the app. It's rich in content. It's rich in brands. It's rich in library."

Priced at $7 a month, Disney+ is a bet that the company can attract as many as 90 million subscribers worldwide in five years.

It already has some key allies. Some 19 million Verizon Communications customers will be able to get the service free for the first year, thanks to a deal Disney cut with the carrier. Disney fan club members, meanwhile, got to prepay for a three-year subscription for less than $4 a month.

"These are deals you just can't beat," said Kevin Mayer, who heads Disney's direct-to-consumer division and has helped craft the streaming strategy.

Disney is looking to make the product accessible to as many people as possible. Customers will get to store their password in as many as 10 devices per family and watch four concurrent streams of movies or shows.

The site is designed around five main "tiles," named after the company's key brands, including Marvel and the recently acquired National Geographic channel. Disney is spending $1 billion on new programming -- such as "The Mandalorian," the first live-action "Star Wars" series -- in the first year alone. Disney+ also will offer the "Star Wars" movies in 4K definition video for the first time.

Unlike Netflix, which releases new seasons of programs all at once. Disney+ will put out one episode per week for its original shows. The programs will come out at 12 a.m. Pacific time on Fridays -- timing geared toward attracting a global audience, according to Ricky Strauss, Disney's head of content and marketing for the product.

A key part of Disney's streaming strategy is bundling its services together. For $12.99, subscribers can get a package that includes Disney+, ESPN+ and the ad-supported version of Hulu. Those three services would cost about $18 a month if purchased individually.

It's all coming at great cost to the company. Mayer's direct-to-consumer division saw its losses more than double to $740 million in the quarter that ended in September. The company doesn't expect to make a profit on Disney+ for at least five years.

But the marketing blitz for the new service seems to have paid off. UBS Group AG analyst John Hodulik surveyed more than 1,000 consumers in October and found some 86% had heard of Disney+. Nearly half were likely to subscribe.

The company created its largest cross-promotional push ever, putting solicitations for the new service in Disney-owned hotels and its radio network. Disney also promoted the new service on ESPN's "Monday Night Football." Fans watched a preview of Disney+'s new "High School Musical" spinoff on ABC on Friday.

"If you haven't heard about Disney+ by Tuesday," Strauss said last week. "I promise you will."

Among the new originals on the show is a live-action version of "Lady and the Tramp." Normally a remake of a classic like that would get a big premiere, a theatrical run and advertising everywhere.

In the streaming era, it gets dropped on a Tuesday morning. The question now is whether the Disney magic still comes through without the Hollywood glamour.

Either way, Disney doesn't have much of a choice, said David Yoffie, a professor at Harvard Business School.

"Netflix has changed the nature of the game," Yoffie said. "If they didn't participate, they would be left behind."

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