‘We had some issues,’ exec says on Disney+ glitches

Walt Disney Co. executive Kevin Mayer said overwhelming demand and a computer-coding glitch led to widespread problems last week when the Burbank entertainment giant launched Disney+.

The company struggled to contend with the more than 10 million users who activated their accounts last Tuesday. Disney’s $6.99-a-month service is stocked with movies and TV shows from Pixar Animation, “Star Wars,” Marvel Studios and classic Disney fare, including “Mary Poppins” and “Bambi.”

There were also more mundane issues, such as assisting people who had forgotten their passwords. Some consumers who sought help on launch day reported telephone wait times that exceeded two hours. Others reported being abruptly logged off the service.

“We had some issues ... we had some customer service issues that didn’t make me feel good,” Mayer, Disney’s chairman of direct-to-consumer and international, said Tuesday at the Vox Media’s Code Media conference in Hollywood. It was his first public appearance since the launch.

Disney’s tech teams isolated the problem, Mayer said, and “patched” the software as the company continued to sign up additional subscribers throughout the week.

An undisclosed number of customers signed up for the free weeklong trial, although it is not clear how many have converted to paid subscribers. Mayer hinted that the company was pleased with Disney+ retention so far.

“We’ve never had demand that we saw that day, and continue to see ” Mayer said.

The streaming service represents a shift in Disney’s business strategy and, potentially, another blow to the traditional pay-TV bundle that bolstered its business. Accelerated cord-cutting has eroded revenue from Disney’s flagship ESPN channels, Disney Channel and other cable networks.

While traditional companies have experimented with niche streaming services, such as CBS All Access, Disney has made an enormous bet, spending more than $3 billion on technology and programming to remain a leader in Hollywood and take on Netflix at its own game.

Netflix has been a game changer but no one knows just how much disruption the so-called streaming wars will have on the traditional pay-TV industry.

“We will see the industry shake out a bit,” Mayer said. “Not everyone will succeed.”

Wall Street analysts are trying to assess which media companies are best positioned for success, and how many streaming services consumers will sign up for. Mayer said it depends on the cost of the service, but he said that he thinks the number will be between four to six services, depending on whether subscribers continue to pay for a traditional bundle of channels.

He declined to say when Disney might change its sports strategy and decide to stream marquee sports, such as NFL football or NBA basketball on its ESPN+ app. For now, those big-ticket sports are primarily found on broadcast networks and the cable channel ESPN.

Eventually, Disney is expected to switch gears again by concentrating its sports offerings on a more comprehensive ESPN streaming service, a move that would probably cause the pay-TV bundle to collapse.

“There will be a time ... when the pay-TV numbers are low enough,” Mayer said. “We want to serve consumers the way they wish to be served.”

Getting Disney+ right will be a key test of Mayer’s mettle. He is viewed as a potential successor to Disney Chief Executive Bob Iger, and he managed the design and last week’s rollout of the service.

Mayer was named chairman of Disney’s direct-to-consumer and international division in March 2018 after years of serving as a business development and corporate strategy executive at the company.

He led key acquisitions, including Marvel Entertainment, Lucasfilm and BamTech, the previously little-known firm that provided the technological backbone of Disney’s streaming efforts.

It’s the first time in Mayer’s career with Disney that he has been in a hands-on operational role.

“Operating is a lot different than a strategy role,” Mayer said. “ I love what I’m doing.”