Disney Turns Fanfest Into a Streaming Showcase as Battle Begins

(Bloomberg) -- Hang on, Disney fans: You’re about to get the hard sell.

Walt Disney Co. is turning the D23 Expo, the biennial fan conclave in Anaheim, California, into a big push for its new streaming services. The three-day event, which opens Friday, will feature more than 20 panels, sneak peeks or presentations tied to new online TV shows and movies. It’s the first time streaming services have gotten the spotlight.

Three services -- Hulu, ESPN+ and Disney+ -- will be showcased in a special pavilion on the floor of the city’s convention center, where guests can test the new apps or see costumes from related shows. Stars including Jeff Goldblum, who’s hosting a science program on Disney+, and Peyton Manning, who’s quarterbacking a football documentary series on ESPN+, will make appearances. Expo attendees will be the first customers allowed to sign up for Disney+, which launches Nov. 12, and will be offered a discount.

Chief Executive Officer Bob Iger calls Disney+ the “most important product the company has launched” during his tenure. The $7-a-month online service will feature Marvel, Pixar and Star Wars movies, as well as a host of original shows.

The marketing push, which includes solicitations to Disney hotel guests, credit-card customers and theme-park pass holders, begins this month.

“The opportunities are tremendous to market this,” Iger told investors on an conference call.

The D23 Expo, first held in 2009, has always been a showcase for all things Disney. Fans, who pay $89 for a single-day ticket, often sleep outside the convention center to be first in line for shopping and presentations.

Festivities at the sold-out event kick off Friday morning with an awards celebration honoring Disney “Legends” who have contributed to the company’s success. This year’s honorees include “Iron Man” star Robert Downey Jr. and James Earl Jones, the voice of Darth Vader.

Disney’s big push at D23 is an early salvo in what’s expected to be a long war over streaming. AT&T Inc., Comcast Corp. and Apple Inc. all plan new subscription-based TV services over the next few months. Netflix Inc., the pioneer, more than doubled its advertising over the past two years, to $1.8 billion in 2018. That was faster than the growth of its programming budget.

Iger has promised big numbers in terms of subscribers. At an investor day in April, the company said it could attract 60 million to 90 million subscribers to Disney+ in five years, two-thirds of them outside of the U.S.

Program Slate

Disney also said it will release over 25 new TV series and 10 original movies for the service, spending more than $1 billion in just the first year. Other properties, such as the Disney Channel, could play second fiddle as key franchises, such as “High School Musical” are snatched and repurposed for streaming. Both that Disney Channel classic and a new version of “Lady and the Tramp” will be panel topics at the expo and carried on Disney+ later this year.

The cost of all this is already evident to investors after the company reported disappointing financial results earlier this month. Disney’s new direct-to-consumer division lost $553 million in the quarter that ended in June, and the red ink is expected to rise to $900 million in the current period, according to Chief Financial Officer Christine McCarthy.

Disney’s TV and film businesses are also taking a hit as they pull back from selling movies and shows to third parties like Netflix and reserve programs for the company’s own streaming services.

“This quarter serves as a stark, some would say harsh, reminder that the transformation effort on which Disney is embarking will be hard, expensive, messy, and complicated,” Todd Juenger, an analyst with Sanford C. Bernstein & Co., said in a report.

All the more reason for Iger to pull out all the stops to make it work, starting with the Disney faithful.

To contact the reporter on this story: 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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