In the UK, from 1 October, Disney’s Magic Kingdom will no longer include linear TV.Generation Media’s Jonathan Chambers, explores how this may impact media buying for the children’s sector for the all-important third and fourth quarters.
Written by Generation Media’s Jonathan Chambers
“Everything the light touches is our kingdom,” so explained Mufasa to Simba.
However, in the UK, from 1 October, Disney’s Magic Kingdom will no longer include linear TV – with the exception of its Fox and ESPN ventures. Having not been able to reach an agreement with Sky over the terms of its carriage deal in the UK, all three Disney channels (Channel, Junior, XD) will no longer be available on any linear TV platform. Disney will retain its ad sales arm within the UK, likely in a new form, in order to monetise its Digital inventory, including YouTube.
There is no doubt that suspicion will be rife that the real motivation behind this move was the successful global launch of Disney+, and that linear TV was not part of the company’s long-term content strategy. Though, to counter this, Disney will rightly point to its renewed carriage deals in other territories such as Germany and Spain. Nonetheless, the success of Disney+ in the UK in particular should not be discounted.
Based on Giraffe Insights’ Kids and the Screen data, compiled in April 2020 (the first full month of Disney+ in the UK), we have seen that Disney+ has already attained a 23 per cent share of the SVOD market amongst two- to 12-year-olds. And this is without necessarily eating the share of established players such as Netflix and Amazon Prime, but instead providing incremental uptake in SVOD as a medium. The latest wave of data now demonstrates that SVOD accounts for 29 per cent of two- to 12-year-old viewing occasions, ahead of both online TV (YouTube) and live linear TV (both 23 per cent).
So how does this affect media planning and buying for the children’s sector as we enter arguably the most important Q3 and Q4 period of all time following the economic impact of lockdown in the UK?
Disney’s linear TV channels will remain on air until the end of September, and will still remain part of campaign schedules for the time being – particularly for the older girls audience, where Disney Channel does provide an element of unique cover, given the lack of focus on this area of the market from other channels (with the exception of Nickelodeon).
However, any inclusion on the schedules up until the end of September will be, as it has been for the past two years, in a limited capacity. The decline of the Disney channels has been well documented following consecutive years of double-digit decline, and Q1 saw this trend continue across Disney Channel (down 15 per cent), Disney Jr (down 26 per cent) and Disney XD (down 37 per cent). As a result, Disney’s share of commercial impacts within the children’s market has fallen below 10 per cent (the lowest point since all Disney channels were made commercial in 2016).
Whilst news of the closure will cause ripples across the industry, we have been predicting for some time a reduced focus on linear for Disney – as was the perceived endgame with the announcement of Disney+. As such, we have been adjusting our client plans accordingly in-line with the diminishing returns. Linear TV’s biggest strength over its digital competitors is its ability to drive mass coverage quickly and cost effectively. However, the unique children’s coverage (4-15) offered by Disney’s portfolio is estimated to be as little as one per cent, limiting Disney’s ability to add value to existing spot schedules.
Sky is positioned to be the main beneficiaries of Disney’s retreat. At present, Sky commands a share of the market that is greater than two-thirds (children 4-15 equivalent impacts), which is set to exceed 70 per cent in Q4 as a result of this change to the linear landscape. This will be led by the dominance of free-to-air channels. In Pop, Sky has the current market leader ready to attract Disney Channel and Disney XD audiences (if they remain on linear of course), whilst Milkshake will be a prime destination for Disney Jr viewers. CITV with its free-to-air advantage should also benefit proportionately more so than Warner Media’s Cartoon Network, Boomerang and Cartoonito.
But could one of the remaining publishers strike a deal with Disney to distribute its content outside of Disney+ and YouTube? Whilst owning and operating their content within Disney+ is a profitable strategy, in the short-term they will still require eyeballs on the content they are producing so having a free-to-air platform (beyond YouTube) on which to do this would arguably be a sensible strategic move. And so too is having a strong free-to-air strategy when it comes to campaign strategies for the autumn/winter period. With this in place, linear TV remains a compelling and competitive platform for children’s marketers in 2020, and beyond.
So perhaps the final words should be reserved for Walt Disney himself as the company embarks on a new chapter in its remarkable history: “You may not realise it when it happens, but a kick in the teeth may be the best thing in the world for you.”
And this is apt if you subscribe to the theory that loss of linear to Disney, is bigger than the loss of Disney to linear. But with the emergence of the SVOD age and Disney+, maybe it’s more appropriate to consider: “We keep moving forward, opening new doors, and doing new things, because we’re curious and curiosity keeps leading us down new paths.”
Sources: Giraffe Insights, Kids and the Screen, MediaOcean, BARB, June 2020