It is official, Disney has declared war to Netflix. August this year, Disney announced that it will end its partnership with the streaming service in 2019 and will pull back all its materials. The main reason for this is that Disney is planning to launch its own streaming service, to compete with market leader Netflix.
However, Netflix does not easily give in to Disney’s attack. Soon after the announcement that Disney is not extending the partnership, Netflix came with its own big news. Netflix announced it signed on Shonda Rhimes, the creator of hit series like “Grey’s Anatomy,” “Scandal” and “How to Get Away with Murder. Additionally, Netflix plans to spend almost 16 billion dollars on creating its own content. This will give Netflix an advantage, since it can make specific series to tap into the needs of its customers. With over 100 million subscribers, Netflix has acquired large amounts of data on what people are watching. It can therefore make specific content targeted on these needs, to better make use of the long tail effect.
On the other hand, Disney also has a great fan base, who are likely to subscribe for the Disney streaming service to be able to still watch the many Disney movies. This might cause a decrease in subscribers for Netflix. Furthermore, the announcement of Disney pulling its content already caused the Netflix stock to fell more than 2%. Thirdly, Like Netflix, Disney is also planning to create original content based on its current library.
Time will tell, who will be the winner of this battle. Both companies have strong customer’s bases, and history of creating valuable content for its users, so the fight will not be an easy one. One thing is sure, users will benefit from this battle by enjoying even more series and additional content to watch!
Sources:
http://money.cnn.com/2017/08/14/investing/netflix-disney-content-costs/index.html
http://money.cnn.com/2017/08/14/media/shonda-rhimes-netflix/index.html?iid=EL
http://money.cnn.com/2017/08/09/media/disney-netflix-streaming/index.html?iid=EL
https://www.usatoday.com/story/tech/news/2017/08/22/netflix-disney-amazon-and-others-vie-top-talent-and-content/566322001/
Thank you for your article! It is indeed interesting to see what will Disney bring to the table, yet my prediction is that Disney being constrained by the corporate strategy and outlook will lack the agility and will definitely lack the data collected by Netflix throughout the years. In order to successfully compete with Netflix, Disney will have to undergo too much structural and cultural changes in the other company’s divisions, which, given the current state of things, is quite unlikely to happen.
Hi Iris,
it’ll be interesting to see how this is going to play out in the long run. I believe the focus of the online streaming and entertainment industry is increasingly focused on TV-shows rather than movies. As Disney is primarily known for their classic animated movies and children’s TV shows, I wonder whether they are able to capture enough market share of the adult segment. As Netflix has been working on creating this kind of content for a quite a while, and is still heavily investing in it as you mentioned, it’ll be difficult for Disney to catch up. It’s essential for Disney to start creating original adult-focussed content like Netflix does, or otherwise they don’t stand a chance.
Nice article. I was already wondering where the Disney movies were on Netflix, kind of missed them. I have to say that a little competition has never hurt consumers. We hope to see decrease in subscription prices and more movies or series to chose from. However, sometimes I wonder whether it is good to have so many different options to chose from. Our generation already suffers from fear of missing out, so it shouldn’t get any worse!