It’s been a busy week for Netflix. Early in the week the streaming giant announced their acquisition of comic company Millarworld. The indie company is responsible for the source material to Kingsman: The Secret Service and the Kick Ass films. At first glance, this seems like a profitable and smart choice for Netflix. However, given the news later in the week that Disney would be pulling its movies off of Netflix by 2019; it seems more like a lucrative retort.
With Disney’s acquisition of Marvel Studios and Lucasfilm, it makes sense that the powerhouse would want to start their own streaming service. The company has often taken a back seat in big decisions by letting others do the work first. With this approach, Disney are able to evaluate the mistakes of others to avoid replicating them. Disney’s acquisitions thus far have been monumentally lucrative with both MCU and Star War’s films making close to, or over $1 billion at a time.
Disney and Pixar films will now relocate to a completely new streaming service. Although it is not certain if Netflix’s Marvel series which includes Iron Fist and Daredevil will jump ship as well. Disney’s CEO Bob Iger said that it is possible that the Star Wars and Marvel movies could be relocated to an entirely new entertainment source. This doubles the potential profit by offering us Disney’s own content. Disney is paid $300 million by Netflix for at least 10 of their films a year. But it remains to be seen if their new subscription service will be more profitable with potential new exclusives.
Netflix has become a powerful competitor to Disney with the move from VOD to Content Creation becoming the companies USP. Netflix has already had success in this department with Stranger Things and The Crown. However, Netflix doesn’t actually own a lot of their own content. They do not even own their most popular show Orange is The New Black, meaning their acquisition of Millarworld is a step in the right direction for the company.
The Push of a Domino
However, a big downside to these types of deals is the charge its going to cost the viewer. Long before this deal, Netflix has had to tackle the issues of piracy, illegal downloading and most recently multiple members on one subscription account. Both shares of Disney and Netflix fell in stock, hours after the news was announced. However, Netflix has racked up over $20 billion worth of debt with new content creation coming quick and fast. But will other companies look at Disney’s move and follow suit?
In the entertainment industry a big merger, deal or exit like Disney’s can cause a domino effect. Both Disney and Netflix seem to be heading towards some kind of content oligopoly. Eventually both companies will own or stream most mainstream film and TV on either of their platforms. Viewing this deal from above, other services like Hulu could simply decide to become their own powerhouse. This may include region expansion to international zones or actual content creation. This would take away the issue of having to license shows that a company doesn’t even own. The company then completely own the rights and fees. A similar issue is already taking place with ABC and Freeform (Cloak and Dagger series).
Disney is taking steps to expand its content creation and it seems like other media companies will follow suit. It may face some resistance in the form of prices, content desire and of course, other rival companies. But overall, it seems like a profitable, albeit late choice.