An article written by Cynthia Littleton over at Variety takes a deep dive into the inner-workings of the upcoming Disney+ direct-to-consumer streaming service. The service, which currently does not have an announced release date or pricing information but is scheduled to go live sometime towards the end of this year, has more moving parts that the average consumer might be aware of. The Variety piece is lengthy but definitely worth the time required to read through it all. Two sections of note from the article have been highlighted below pertaining to the size of the financial commitment Disney is expected to make to this new content delivery system.
Disney is up to the huge challenges ahead, in the view of RBC Capital Markets senior media analyst Steven Cahall. He estimates the company will devote about $500 million to original programming for Disney Plus in 2019. “Disney spends more on content than anyone else globally. It has decades of experience in making excellent content, it has a huge balance sheet with low leverage and it’s a brand that’s known the world over,” Cahall wrote in December.
From a Star Wars and Marvel production budget perspective, it appears that Disney will be willing to open their wallets in order to develop the best possible content under those two heavyweight entertainment properties.
On the series side, as development began to ramp up last year, there was confusion about how Disney Plus would handle dealmaking and the always-contentious issue of profit participation points for talent. Disney ultimately settled on a formula for “buying out” points up front — much as Netflix, Amazon and HBO do — because there will be no aftermarket sales of the titles to split among participants. Sources describe the Disney Plus formulas and pay scales as generous for Marvel- and “Star Wars”-branded productions — “They’re spending real money on those shows,” says one top TV agent — but that other productions are offering less lucrative deals than comparable projects would likely command at Netflix or Amazon.
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