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Why Disney Plus May Have Problems Releasing Internationally

Disney Plus and the EU

The international release of Disney's upcoming streaming service, Disney Plus, won't be quite so simple a matter as many would hope. Intended to be a direct competitor to the likes of Netflix and Amazon Prime, Disney Plus is expected to launch in the United States by the end of the year. It will include a phenomenal amount of original content, including live-action Star Wars TV series such as The Mandalorian, six-to-eight-episode Marvel Studios shows featuring stars of the big screen such as Tom Hiddleston, and even live-action remakes of Disney classics Lady and the Tramp and The Sword in the Stone.

Disney is definitely planning to roll Disney Plus out internationally. The House of Mouse has been quietly conducting major structural changes ahead of the streaming service's launch and the Fox acquisition, and senior executive VP and chief strategy officer Kevin Mayer has been named head of a new unit called "Disney direct-to-consumer and international." This division is responsible for oversight of all Disney distribution, including Disney Plus, ESPN, and Disney's shareholding in Hulu. It's important to note that the direct-to-consumer and international distribution sit side-by-side, clearly signposting the company's strategic agenda.

Related: Disney Plus Streaming Service: Everything We Know About The International Release

But the global release won't be a simple matter. First Disney will need to conduct an arduous process to regain the distribution rights for its various properties. In the US, the company has already pulled out of its distribution deal with Netflix, with new Disney content set to stop going to Netflix in March; all other Disney content is then expected to be removed from the Netflix catalog by the end of the year. Right now, it looks as though Disney will only roll their streaming service out to a territory when they've regained that country's distribution rights in full; there doesn't appear to be any interest in varying the library on a country-by-country basis, the approach Netflix traditionally take.

But there's also a second issue; some countries have what are called "content quotas" for streaming services. The idea is that, if a streaming service wishes to distribute to a country, a certain proportion of their content needs to be made there. A number of European countries have well-established content quotas, but last October the European Union legislated to make one that's EU-wide. Member States have just under two years to implement some form of this into national legislation. If Disney intends to roll out their streaming service to EU countries, then 30 percent of content will need to be produced within the EU. As a result of this, Disney's competitors are hurriedly bulking up their European presence. Netflix plan to establish a production hub in Spain, and Amazon is working on a slate of content including the British Good Omens and the German Bibi & Tina. Disney will need to decide on their own approach, but it's worth noting they may have an advantage over their competition; they are already one of the world's biggest global content producers, after all.

Brexit, however, is a fly in the ointment. Nobody quite knows what's going to happen as regards Britain's departure from the European Union; right now, the U.K. exits the EU by default on March 29, although a Withdrawal Agreement is being voted on in the British Parliament that will establish a two-year transition period. That means British-made shows may not count towards the EU content quota by as soon as April this year (or by as late as two years' time, depending on the outcome of the Parliamentary votes). Adding to the confusion, it's currently unknown whether or not the British Government intends to replicate some form of the content quota in British law. Given this high degree of uncertainty, it seems reasonable to assume Disney will hold off on releasing Disney Plus in the U.K. - at least until they're given a sense of how Brexit will go and what the British Government's legislative priorities will be going forward.

Global distribution is clearly Disney's long-term goal. But it's not going to be quite so simple to achieve as has commonly been assumed, and rollout will likely take years to happen.

More: 2019 Could Be Disney's Riskiest Year

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