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Disney+ Opening the Floodgate for DTC Services in 2020

OYSTER BAY, N.Y.—The impact of Disney+ goes beyond all the memes of Baby Yoda from “The Mandalorian.” The direct-to-consumer (DTC) OTT service, which will be joined by others like HBOMax and NBCUniversal’s Peacock in 2020, is forecasting a shift in the video market, according to a new report from ABI Research.

ABI dove into this and other topics in its “54 Technology Trends to watch in 2020” report. Some of the other trends dealt with virtual reality and augmented reality, 8K and 5G.

The last few years, virtual MVPDs like YouTube TV, DirecTV Now (now AT&T TV Now) and PlayStation Vue (soon to be defunct) were seemingly pointing to how content was distributed as being the key factor in a changing market. However, the popularity of Disney+ and its library of content is shifting that paradigm, and the launch of DTC services HBOMax and Peacock—with deep libraries of content of their own—will result in consumers debating how they will spend their content budget, per ABI.

This will make it difficult for new services that do not have preexisting content to make an impact in the market, predicts ABI. It says Apple TV+ is an example of that already with its lower price ($5 per month) and its bundling with new Apple hardware purchases to help spur subscriber growth.

ABI does see a potential avenue for traditional pay-TV operators. “[T]he shift to DTC does create an opportunity for these MVPDs to serve as an aggregation point for fragmented OTT services,” ABI writes.

2020 may be a good year for DTC, but ABI does not see a big growth in 8K TVs. While the 2020 Summer Olympics in Japan will be broadcasting in 8K, that hi-res broadcast is expected to be limited to the host country. In reality, 8K content for TVs around the world is still extremely limited, so, “without the content to take advantage of the higher resolution, adoption, of course, will be limited,” ABI reasons. 

Price is expected to come down for 8K TVs, though it is still expected to be higher than the average consumer can afford, so ABI forecasts less than 1 million shipments of 8K TVs worldwide in 2020. However, 4K TVs are expected to see some growth.

Other findings from ABI’s report touched on VR and AR technology. While there is growing buzz for consumer VR experiences, it is not expected to see a big growth as there still needs to be some maturation in both the hardware and software for the technology. AR, on the other hand, is expected to have some significant growth, particularly on mobile platforms. 2020 will be more of a chance for VR to establish a clearer path moving forward, says ABI.

ABI also touched on the deployment of 5G. It said that it expects 5G Fixed Wireless Access services to see “accelerated growth,” while other 5G services will continue to be built out, though there will still be ample room for growth in the coming years.

One thing that ABI did not touch on that is set for a major deployment next year is Next Gen TV. The new television standard garnered no mention in the report, even though it is expected be available in the top 40 U.S. markets by the end of 2020.

More information can be found on ABI Research’s website, www.abiresearch.com.