Disney Considering A FAST Tier, Plays Nicely With TikTok

1. Disney Considering A FAST Tier

Those of you who are regular readers of this column will know that I have long argued that the big subscription services all need to launch their own free ad-supported tiers.

The reasons for this, as we shall see, are both myriad and self-evident.

And so it has been most delightful to watch as first Paramount and now Disney announced that they would indeed be doing something like this.

Or, at the very least, exploring it. Nothing, after all, is ever certain.

Why It Matters

There are so many reasons launching a free service makes sense, but here’s my top four:

1. Taking Advantage of the Assets: To begin with, the big streamers all have huge libraries of high quality library content, often shows that are not available anywhere else. 

And people rarely watch these shows because they think they are supposed to watch the new originals on the services and (more importantly) the algorithms who control what they watch also share this POV.

Meaning that entire seasons of American Dad on Hulu can go unwatched. Which, if it isn’t a crime against humanity, certainly comes close.

2. Expanding the Ad-Supported Base: Then there’s the reach bonus. 

It is no small secret that the streaming services have all struggled to add ad-supported subscribers in the US, and that agencies often feel these viewers are of lower value than their ad-free subs.

So a free service gives the streamers a much larger pool of people to sell ads against, a pool (and this is important too) that is unlikely to experience any significant degree of churn.

3. All That Data: The subscription streaming business in the US is a tough market and having someone’s email address (and quite possibly their credit card information if they are a former subscriber) is a huge boost for any CRM or marketing campaign. It also helps with data—that email address can help streamers track (in a privacy compliant way) who saw an ad and if they did anything after seeing it (store visit, website visit, purchase).

4. The Upsell Potential: This is probably the strongest point in favor of the free service: The more users watch on the free service, the more the service knows about their preferences. That data can then be used to try to fuel a broader effort to get them to resubscribe, highlighting, for instance, the start of a new season of a show they have been watching, or of a show similar to one they’ve been watching.

Now there are those arguing against setting up a free service by claiming that it will cannibalize the existing subscriber base, especially the ad-supported subscriber base, and to those naysayers, I say “poppycock!”

Partly to highlight the outdated nature of their thinking, but also because it would not seem to be true. The only reason someone would pay for a streaming service is to watch the new shows that are not available anywhere else.

If they unsubscribe—and churn is a massive problem in our industry—then they are lost to Disney for the foreseeable future. But if they are just downgraded to the free ad-supported tier of the Disney+ app then they are still within the ecosystem and Disney can not only try and sell them on renewing their Disney+ subscription, it can sell them on the Disney parks, cruises and movies.

And if they are on the ad-supported subscription tier and they downgrade, they lose access to all those originals they signed up to watch, so it’s unlikely for anyone to actually go that route.

So again, there really doesn’t seem to be a whole lot of downside to the move.

One possibility—and I feel it is fairly remote—is that the owners of the TV operating systems that host the Disney app will punish them for stealing eyeballs from their own FAST services by doing the TV equivalent of shadowbanning the Disney app in search and otherwise making it difficult to find.

And the reason I feel that is fairly remote is because it’s Disney. And chances are good that whoever bought that TV set is going to want to watch the Disney+ app and be more than a bit annoyed if finding it proves to be a hassle. Which would make any sort of shadowbanning activity into what the kids call a self-own.

What You Need To Do About It

If you are Disney, you need to make this happen. I mean it’s nice to talk about it in your earnings calls and all that, but if you do this your shareholders will love you, your fans will love you even more and everyone else will decide to copy you. It’s an easy thing to do and will generate both good karma and good profits.

If you are the other streaming services, just follow Disney’s lead. In a business where the smartest move is often one that someone else just made, this is truly a no-brainer and it will ensure that you don’t get left behind.

If you are an existing FAST service, either via an OEM or an independent, you need to figure out what your angle is. Assume that all of the major streamers will have a free service in the next two to three years, and then figure out where yours fits in, why someone would still want to watch your service, why someone would still want to buy ads on it.

If you’re an ad agency and this happens, you can stop bitching about “low-quality inventory.” (Not that you don’t have a point, but still…)

If you’re the television industry in general, you’re still not going to get the money you should be getting unless you figure out measurement. 

Just saying.

2. Disney Plays Nicely With TikTok

The other part of Disney’s announcement yesterday was that they were going to start playing nicely with TikTok, that they would be licensing their IP to TikTok so that TikTok’s vast arsenal of creators can use it in their own content, clipping the Disney IP into short-form vertical videos.

Disney will then take the best of those TikTok videos and share them via a new vertical feed on the Disney+ app.

It’s positioned as a win for both sides—TikTokkers get a new audience and can legally work with Disney IP and Disney gets a host of talented people who will promote its characters, TV series and movies for free. Not to mention a vertical video feed to breathe new life into their mobile app.

Why It Matters

It’s tempting to call this Sora 2.0 after Disney’s attempt to license its IP to the ill-fated Sora AI movie app. 

But that would not be fair. At the time I had expressed skepticism over Sora given that it did not yet have an army of Sora “creators,” speculating that the main use case would be one-off birthday party invitations and the like.

But TikTok is not Sora.

It does have an army of creators who would be happy to make use of the Disney IP and then share it with their millions of followers.

The TikTok algorithm will then promote these videos, drawing in new fans and solidifying the love of the existing base.

So really a win all around as both platforms get to reach new audiences with vertical content that’s been reworked, for free, to match the tastes of modern audiences.

What’s more, TikTok is international, so that Disney will be reaching a global audience this way, not just an American one.

What You Need To Do About It

If you are a TikTokker, bone up on your Disney lore. Modern princesses like Moana and Mulan are easy, but I suspect there is much you can do with classic characters like Cinderella and Snow White.

And yes, I am inventing the term “PrincessTok” here because you know that it’s coming. (Or already did, right now it exists as a page for women who make a living playing Disney princesses at birthday parties. Because why not.)

If you are the parent of small children, give thanks, as all of those kid-oriented TikToks are going to give you hours of relief and you won’t have to rewind them. 

And no, it will not hurt your kids’ chances at Harvard if you do.

If you are Disney and TikTok, take a bow. You’ve done a stellar job of keeping up with where the puck is headed and creating a deal that will benefit both of you.

Well done.