Disney+ Finds Ramping Up New Streaming Service Has Its Minuses

(Bloomberg) -- In August, actress Hilary Duff described rebooting the “Lizzie McGuire” show for the Disney+ streaming service as a dream come true. Seven months later, it’s become a dream deferred.

Disney halted production of the series and parted ways with creator Terri Minsky in January, citing creative differences. Duff, 32, put out a statement on Instagram last month saying she didn’t think the new family-friendly streaming service was the right place to air an update of her hit teen comedy, which ran on the Disney Channel in the early 2000s.

“I’d be doing a disservice to everyone by limiting the realities of a 30-year-old’s journey to live under the ceiling of a PG rating,” she wrote. Duff asked Disney to move the program to its more adult-oriented Hulu service.

It’s not often that actors make public recommendations to management about a show they’re working on, but the Duff dust-up underscores the challenges Walt Disney Co. faces as it adapts to the streaming era. The company is struggling to find the right programming for the new Disney+ service, its most important new business initiative in years.

“Our goal is to resume production and to tell an authentic story that connects to the millions who are emotionally invested in the character, and a new generation of viewers too,” Disney said in a statement about the “Lizzie McGuire” show.

Though just five months old, Disney+ has already seen a number of high-profile projects fizzle. These include a “Muppets” series with Disney star Josh Gad, and “Book of Enchantments,” a show about Disney villains that was in development. Such moves are routine in the TV business.

Other shows such as “Love, Victor,” based on a 2018 Fox film about a gay teenager, have moved to Hulu, due to their more adult content. The same was true for “High Fidelity,” based on the 2000 romantic comedy. It debuted on Hulu last month. Even acclaimed director Ron Howard reported that Disney+ still hasn’t given him a go-ahead to remake his 1988 fantasy “Willow,” a project that has been discussed publicly since last May.

Disney+ got off to a fast start, buoyed by a vigorous marketing effort. The company signed up 28 million customers in the first four months on the popularity of “The Mandalorian,” the “Star Wars” series that debuted with the service in November. Customers also jumped at the chance to see movies and TV shows from the Disney library for just $7 a month.

But one hit can’t sustain a streaming service. Netflix releases multiple new programs a week, and has generated buzz this year with the unscripted series “Cheer” and “Love Is Blind,” along with returning hits like “BoJack Horseman.” Beyond “The Mandalorian,” Disney+ hasn’t come up with shows that are popular with adults or reach the level of water cooler chat.

Dated Content

About 55% of the programming on Disney+ is 10 years old or more, according to Ampere Analysis, a London-based research firm. That compares with 48% at Amazon Prime Video and just 19% at Netflix. Disney has far less in development, too, at 54 series, compared with 287 at Netflix and 148 at Amazon, according to Ampere.

Disney has promised to spend heavily on original programming -- more than $1 billion this year and $2 billion by 2024. It plans 25 new series and 10 new movies for Disney+ in the first year, building up to 50 shows by year five. “The Falcon and the Winter Soldier,” the first of eight new Marvel TV series, will debut in August.

On Friday, the company announced the lineup for Disney+ in Europe, which launches March 24. It includes over 25 original programs, such as “High School Musical: The Musical: The Series” and “The World According to Jeff Goldblum.”

“Disney is very reliant on a handful of tentpole titles for its service,” said Richard Broughton, research director at Ampere. “Disney+ needs to begin rolling out new originals at regular intervals to discourage subscriber churn and ensure the platform is well-received in international markets.”

Balancing Act

Growing pains are natural for a big company entering a new business. It took years for Netflix to build a pipeline of original shows. And unlike the streaming leader, Disney must balance the needs of its conventional channels, such as ABC, National Geographic and Freeform, against its new streaming businesses.

Agents, producers and studio executives working with Disney describe a too-many-cooks scenario. Two years ago, the company named Ricky Strauss, a longtime Disney film executive, to oversee marketing and content at Disney+. But most shows created at Disney are developed by company-owned studios at Marvel, ABC, FX, Lucasfilm and 20th Television -- each with its own management and creative staff.

Last year, Dana Walden, who heads ABC and other traditional channels, was put in charge of scripted original content at Hulu.

Several of the shows that didn’t work for Disney+ have found homes at Hulu, which Disney controls, thus keeping them in the family. That service is meant to be the more adult part of a three-pronged streaming strategy that includes family-friendly Disney+ and sports on ESPN+.

With new competitive threats looming, the urgency will only grow for Disney. Next month, Comcast Corp. and its NBCUniversal division launch their new Peacock streaming service, while AT&T Inc. follows in May with HBO Max.

“They clearly proved to the market that they had a brand, content library and business model that very much resonates,” said Christopher Erwin, founder of RockWater, a strategic advisory firm. “They have a really unique product and portfolio, and allocating it appropriately takes time.”

To contact the reporters on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net;Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum

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