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Disney Says ‘Captain Marvel’ Will Be First Pic Held Back From Netflix, Expects $150M Profit Hit In 2019

The beginning of the No-Netflix Era for Disney is officially at hand.

Captain Marvel, which comes out March 8, will be the first title held back from Netflix and instead ticketed for Disney+, the high-profile streaming service coming by the end of 2019, CEO Bob Iger confirmed Tuesday. CFO Christine McCarthy estimated the “forgone” near-term opportunity from this and other releases in 2019 would cut operating income by about $150 million.

The executives offered the guidance during Disney’s conference call with Wall Street analysts to discuss the company’s better-than-expected first-quarter numbers. They promised more clarity on April 11, when the company plans a major demo of the Disney+ app, as well as an in-depth discussion of its financial impact. Still, Iger held forth at some length, pointing to the running start the company would have on the tech side, with its ESPN+ app already at 2 million subs just nine months after launch.

“What we’re basically trying to do here is invest in our future,” he said. The moves the company has made are “all designed so that long-term this business will become an important part of Disney’s bottom line.” While the company is incurring losses associated with the launch — and will see more forgone licensing revenue as each quarter rolls on, “It’s almost the equivalent of deploying capital to build out our theme parks,” Iger said. “This is a bet on the future of this business.”

AT&T’s WarnerMedia is also pursuing a subscription strategy but raised eyebrows last December by extending the non-exclusive rights to Friends, netting $100 million. AT&T CEO Randall Stephenson had emphasized that the company would not employ a “cookie-cutter approach” when it came to making licensing decisions.

The tenor of Iger’s comments made it sound like Disney plans a more across-the-board commitment, which could be tested with shows like Grey’s Anatomy, a perennial draw on Netflix, where even Disney-owned ABC concedes it built its following. “In terms of making decisions about where content goes,” Iger said, “since we are betting on this long-term we obviously need to fill it with intellectual property.”

On the tech front, Iger said the experience of ramping up ESPN+, especially during a recent promotion tied to UFC bouts, has been a big help.

“What we’ve learned, which is extremely valuable when it comes to future launches, like Disney+, is that the BAMtech platform that we invested in when we bought BAM, is an extremely robust platform capable of handling not only scale in terms of handling multiple streams simultaneously but a substantial number of transactions,” Iger said.

During UFC promotion, the system was processing 15,000 transactions per minute without any outages, Iger added.

As the company moves toward the era of populating Disney+ and its two streaming cousins, ESPN+ and Hulu (of which Disney will soon own 60%), Iger said the aim is to respect traditional windows, at least initially.

While some Wall Street analysts and industry figures have questioned the ability of Disney (and its media peers, for that matter) to go up against the $15 billion-plus war chest of Netflix, Iger struck an optimistic tone on the cost front.

“We have talent – both executive talent and production relationships – that enable us to scale up nicely and not invest too much in overhead to do that,” he said.

The company has not announced a launch date for Disney+.

One other topic on the call was the integration of 21st Century Fox assets. Since the deal hasn’t yet closed, Iger stayed fairly tight-lipped about strategy, including Hulu.

One tidbit sure to warm the hearts of Deadpool groupies was a reprise of comments Iger has made since late 2017. He assured Wall Street (and the industry and fans, by extension) that R-rated superhero movies, including future Deadpool installments, would be welcome. “We will continue in that business,” he said. “There’s certainly popularity” to recent Fox titles like Deadpool and Logan. They will be released under a yet-to-be-determined banner.

In a similar spirit, Iger said FX TV titles would factor heavily into the company’s strategy, but wouldn’t likely lean toward Disney+ because of their generally non-family-oriented nature.

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Disney Says ‘Captain Marvel’ Will Be First Pic Held Back From Netflix, Expects $150M Profit Hit In 2019

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