Fox Searchlight to Hulu? $100 Million Budgets? No R-Rated Movies? – Assessing Disney’s Current Streaming Plans

Before yesterday’s earnings calls with Disney CEO Bob Iger, here’s what we knew or at least believed to be true about the Mouse House’s forthcoming streaming service and overall streaming plans:

• The Disney-branded streaming service will have significantly fewer movies and TV shows than Netflix, but it will aim to make up for that with quality original programming and serve as one-stop-shop for all of your favorite Disney franchises.
• Hulu, which will soon see Disney take over as majority owner after its Fox deal is approved, is likely to be slightly refashioned into an adult alternative, the service the parents use to watch award-caliber movies and TV shows while the kids stream the latest Pixar cartoon on the Disney service. This is where all those Fox Searchlight movies, like last year’s Best Picture winner The Shape of Water, will end up.
• And the already-launched ESPN Plus will continue attempting to stop the bleeding at ESPN, which has quickly become an albatross hanging around Disney’s neck.

Here’s what might be true based on what Iger said yesterday morning on the call:

• The Disney service will indeed bank on superior brand awareness instead of overwhelming supply of content to compete with Netflix. As Iger said, the service “does not need to have to have close to the volume of what Netflix has because of the value of the brands.” However, it won’t just be Disney, Pixar, LucasFilm, and Marvel behind that pay window – incoming Fox brands like Avatar and The Simpsons will also be used to sell consumers on the Disney-branded service. Iger believes this positions the company to not just compete but “thrive alongside Netflix, Amazon and anyone else.”
• Having three separate streaming services will indeed be leveraged to appeal to everyone. “They will basically be designed to attract different tastes or different audience demographics,” said Mr. Iger. There might even be an option to bundle all three subscriptions should certain customers want that.
• Fox Searchlight will likely be converted into a production farm piping original film and TV projects into the streaming services.
• 20th Century Fox, however, will not be abandoning movie theaters. The forthcoming Avatar and X-Men sequels, Iger noted, will not be produced for streaming distribution, instead remaining traditional theatrical releases. So, stop spreading those New-Mutants-and-Dark-Phoenix-will-be-dumped-on-streaming rumors, I say while pointing to myself.

Iger didn’t say Fox Searchlight is definitely going to become a streaming production company, he just said it’s likely. Still, we can see where this is trending, and it’s at least nice to say we may have the option to bundle Disneyflix (as Hollywood has taken to call it since Disney has yet to provide an official name for its Netflix-killer) and Hulu together, along with ESPN Plus if you’re a sports fan.

However, Iger was purposefully vague about Fox, and I’m not clear if he actually said The Simpsons will be used to promote Disneyflix or if The Wall Street Journal’s reporting about the call just made a conclusion for him. We’d previously heard The Simpsons, deemed too rowdy for Disney, would go to Hulu, although new episodes will apparently continue to air on Fox (instead of switching to FX, FXX or just Hulu, as some had anticipated).

The more substantive news came days before Iger’s earnings call. Over the weekend, Brooke Barnes of the New York Times published what might just be the first behind-the-scenes account of Disneyflix. Turns out, the man in charge of it all, 51-year-old Ricky Strauss, has a rather interesting background.

Starting out in Tri-Star Pictures’ advertising department in 1988, Strauss’ career has run the gamut from producing financial disappointments like Go, The Sweetest Thing, and Fair Game to overseeing the production of The Help to heading up Disney’s marketing department for the past six years, where he launched some of the most successful marketing campaigns in the company’s history. This unique background in both film production and film marketing is what got him the job as creative head of Disneyflix. In fact, he’s been given greenlight power, an increasingly rare commodity in Hollywood.

He’s now responsible for steering multiple multi-million dollar projects. Jon Favreau’s forthcoming 10-episode Star Wars series alone will cost $100m. “Marketing is about telling a story, and his background in that area allows us to collaborate and create new content,” read Favreau’s email to the New York Times to support Strauss’ credentials and work thus far as his new boss.

If you think of all of this work being done on some ginormous Disney lot, on the complete opposite side of Favreau’s sets would be Timmy Failure, a $45m-budgeted movie adaptation of author Stephan Pastis’s best-selling book series. Penguin Random House describes the series thusly: “Meet Timmy Failure, the clueless, comically self-confident kid detective who will have you snorting with laughter at his antics in this hilarious — and unexpectedly poignant — new series.”

Directing this adaptation is Tom McCarthy, making this his first new movie since winning Best Picture for Spotlight. (He did direct two episodes of 13 Reasons Why in the interim). Notably, the company which made Spotlight is now out of business, speaking to the depressing ills of traditional film distribution and also why McCarthy (and anyone else) might seek out surer financial footing at Disney.

However, Disney’s not the only game in town. In fact, they’re arriving quite late to the streaming party. Netflix and Amazon are obviously both already up and running, and Apple continues to throw money at original content with vague plans as to how that content will actually be utilized and distributed. Landing Tom McCarthy’s next movie is a legitimate get for Disney in the kind of signal it sends to the rest of the industry. As Strauss told NY Times, “There’s a big, big opportunity for storytellers inside and outside of Disney to help us.”

Which is why it’s likely incredibly inconvenient that Disney just fired James Gunn over some old Twitter jokes. Considering Disney’s looming ownership over half the domestic market and well-positioned run at the streaming giants, there is a certain “you can’t fight City Hall” element to dealing with Disney in Hollywood. However, given the competition from Netflix, Amazon, and Apple certain creatives might think twice now before working with not just Disney but any of the Disney-owned companies, including Fox Searchlight, which might suddenly have more onerous brand restrictions.

But it’s not like McCarthy is making another movie about corruption in the Catholic church. He’s adapting a book designed for eighth graders. That’s perfectly on point for Disneyflix, which NY Times learned will have no R-Rated movies.

Joining Timmy Failure in Disneyflix’s family-friendly lineup of original movies will be:

• Live-action remakes of Lady and the Tramp and The Sword in the Stone
• Togo, “a period adventure about a sled dog”
• Noelle, “starring Anna Kendrick as Santa’s daughter”
• A Three Men and a Baby remake
• The Paper Magician, set at a school for magic
• Stargirl, based on the young-adult novel about a free-spirited, former home-schooled teen whose sudden attendance at a Arizona high school sets off an intriguing series of events.
• A new version of Don Quixote from The Last Tycoon’s writer-director Billy Ray.

The budgets for these projects range from $20m to $60m.

On the TV side, there will be:

• High School Musical and Monster’s, Inc. spin-offs
• A new Muppets series
• Various Marvel-themed shows, though there are no immediate plans to transfer over Netflix’s Marvel shows
• The new season of Star Wars: The Clone Wars
• Plus, Favreau’s live-action Star Wars series

Apart from Favreau’s show, most series will cost just $25m to $35m.

As far as older content goes, there will be at least 5,000 episodes of old Disney TV shows on there along with plenty of Disney movies, although not as many as you might expect. Iger acknowledged much of Disney’s past content is currently “encumbered” via deals with Netflix, Starz and others, which will cause a delay in their arrival to Disneyflix . It’s unclear where exactly Fox’s incoming library will end up, perhaps ultimately divided between services depending on content restrictions.

As a reminder, here’s everything Bob Iger will soon have to play around with in addition to everything they already owned:

This is all being done, of course, because of the rise of cord-cutting. As I write this right now, I’m sitting in a house that doesn’t have cable TV anymore. It’s hardly a unique situation. The annual increase in cord-cutting was supposed to just be 22% last year; instead, it rose to 32.8%. It remains to be seen where the cutoff point will be where there are finally too many streaming alternatives, when we’ll we reach a point where subscribing to all the streaming channels you want will add up to being more expensive than a cable subscription. If you want the new Star Trek, you have to pay for CBS All Access. The new Young Justice, Titans, and Harley Quinn shows? DC Universe. The new Marvel PG-15 shows? Netflix.

Want the new PG-13 Marvel shows, Star Wars shows, Pixar cartoons, Marvel movies, Star Wars movies (though not the original trilogy), Alien, Avatar, Ice Age, Deadpool, Kingsman, Predator, Die Hard, Family Guy, Futurama, Simpsons, The X-Files, High School Musical, promising children’s novel adaptations, a Three Men and a Baby remake, a fun new Anna Kendrick Christmas movie, Fox Searchlight’s latest Oscar bait, and who knows what else? Disney’s got you covered.

Disneyflix, or whatever it ends up being called, is due sometime next year.

Sources: Wall Street Journal, The New York Times