Dinosaur Disney Might Disrupt Trendy Netflix Out of Business: Forbes
Disney+ will soon be entering the streaming market, and Netflix will subsequently lose most of its best content for kids and families. | Source: (i) Shutterstock (ii) Shutterstock; Edited by CCN.com
By CCN.com: Forbes writer Stephen McBride believes that Netflix’s days are numbered . Disney+ will soon be entering the already-crowded streaming market, and Netflix will subsequently lose most of its best content for a substantial market: kids and families.
Disney+ Likely to Rule the Market
McBride makes a compelling argument based on historical facts. For starters, Netflix has borrowed tons of money to fund its original content. It spends more than CBS, ABC, or anyone else on new programming.
Netflix‘s stock has been soaring as it zooms past cable companies in terms of subscribers. But the company may find itself in a bind when it loses access to some of its best content. McBride writes:
“Disney has shown it can produce movies and shows people want to watch. No competitor comes within 1,000 miles of Disney’s world of content. […] Meanwhile, Netflix will lose a lot of its best content — and potentially millions of subscribers who switch to Disney+. While Netflix is running into debt “trying out” new shows, Disney already has the best of the best in its arsenal.”
Reportedly, Netflix owes more than $50 billion to creditors. It doesn’t distribute its content on a per-title basis in the same way that other producers do. You can rent virtually any TV show through Amazon Prime or iTunes. But if it’s a Netflix show, you have to subscribe to the whole thing.
How Will Netflix Survive Without Disney?
Netflix hopes its original programming, which it doesn’t have to negotiate the licensing for ongoingly, will continue to bring on new subscribers.
But McBride and others don’t think it will. A sizable part of Netflix’s value proposition is a variety of children’s programming – plenty of which comes from Disney. But Disney owns some of the biggest powerhouses of kids entertainment in the world, including Marvel and Pixar, two of the biggest kids studios ever.
No one competes with Disney on content.
The dinosaur media powerhouse produced four of the five biggest blockbusters in the past year. Its films earn an average of $1.2 billion. Netflix doesn’t have the resources – and soon won’t have the revenue stream – to compete with Disney.
Even if Netflix managed to conglomerate all of the other content companies in the world, it would probably still find itself in a heated battle for subscribers.
Will Disney Eventually Own Netflix, Too?
There are a few possible futures for Netflix.
In one scenario, they are eventually acquired by Disney. After all, Disney will be eating their lunch from the beginning of its streaming days, as it will offer a lower subscription price.
For parents who strictly have Netflix for their kids, it’s a no-brainer. For others, it will be a tough decision. As McBride points out, Disney could make its only after-market distribution of films be Disney+. This would put people whose kids want to see the most popular movies in a situation where they have to use Disney+ and might make Netflix seem extraneous.
In another scenario, Netflix aggressively lowers its otherwise increasing prices . This scenario works out best for consumers: potentially, the Disney effect is that consumers spend just a little more to get a lot more content by having both subscriptions.
The other scenario, which McBride implies, is that Netflix crumbles under its debt obligations and fails to expand fast enough to stay alive.
What do you think will happen? Let us know in the comments.
