Has the Netflix vs Disney streaming war already been won?

Disney’s plans for a Star Wars TV series could prove the Death Star to Netflix’s Alderaan.


Jack Kavanagh

In 2011, Netflix announced that their streaming division would separate from the DVD rental business on which the company was built. Streaming had emerged as a viable model due to increased broadband speeds. Netflix secured licensing agreements with studios and channels, realising that users were agnostic and only interested in which service provided the best content.

They realised that securing exclusive streaming rights to shows like Orphan Black wasn’t as dependable as producing original content. Switching focus to Netflix Originals guaranteed exclusivity and greater profit margins. That initial announcement felt pretty jarring at the time, but Netflix’s original programming has been a key factor in them monopolising the streaming market.

The streaming war truly began in August 2017 when Disney announced an end to their 2012 deal, stating that they will remove video content from Netflix in 2019. Netflix stock dropped in the wake of the announcement. They were prepared for a situation like this, having built a respectable bank of original content. In anticipation of Disney’s move into streaming, Netflix is doubling down on its own original content, announcing an $8 billion content budget for 2018 to keep their 117.6 million global subscribers loyal.

Details of Disney’s streaming platform remain hazy but we know it is scheduled for launch in late 2019, and will feature everything Disney puts into cinemas from 2019 and beyond. Crucially this means future theatrical releases from Marvel, Pixar and Lucasfilm – titles slated so far include Avengers 4, Frozen 2, Toy Story 4, Star Wars Episode IX and live-action adaptations of Aladdin, Lion King and Dumbo. Terrible news for anyone who’s already complaining about franchise fatigue, but Disney CEO Bob Iger’s plan to include a new Star Wars TV series, along with adaptations of High School Musical and Monsters Inc, seems a shrewd one.

The service will launch in the US before expanding globally, and Disney is keen to keep the content family-friendly. They could potentially house the more adult-titled content on Hulu, of which Disney owns a 60 per cent majority stake. As noted in The Verge, Disney intend to create a 360-degree “holistic ecosystem of entertainment, all under one corporate umbrella.” This unprecedented level of corporate control means we could watch a new Star Wars film in the cinema, then go home and stream episodes of the TV show. Heading to Disneyland? There’s plenty Star Wars rides along with books and comics all officially licensed of course.

Under Iger, Disney has made a habit of acquiring lucrative properties in multi-billion dollar deals; Pixar in 2006, Marvel in 2009 and most recently Lucasfilm in 2012. The returns have been astronomical – Disney films currently account for five of the 10 highest grossing movies of all-time. This would rise to six if their $52.4 billion acquisition of Fox goes through as expected, while each Marvel film averages $840 million at the global box office.

Netflix may be willing to invest in high-quality original programming, but Disney has 75 years of cultural capital in the bank. But the real concern for Netflix right now is Iger’s statement that Disney’s streaming platform will aggressively undercut Netflix. To fund their plans for 2018 and beyond, Netflix has already increased their subscription fee, effectively passing the cost on to the consumer.

Disney, meanwhile, can afford to run a cheaper service thanks to the insurance provided by various other revenue streams, including ABC, ESPN and a host of theme parks. The Fox acquisition would bring even more riches to Disney, with ownership of popular franchises like The Simpsons, Die Hard and Planet of the Apes on the horizon. This combination of classic and future content is Disney’s ace card; they may have already won the streaming war without a shot being fired.

Jack Kavanagh is the editor of Culture Hash, a blog on popular culture and music.

Published 17 Mar 2018

Tags: Disney Jon Favreau Netflix VOD

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