Netflix Punch, Disney Counterpunch?
There’s an epic struggle being played out at the nexus of video content and distribution right now. In one corner we have the video streamer Netflix who’s playing the role of the ultimate TV disrupter. In the other corner we have Disney, the entertainment industry’s standard bearer who has the deepest video content vault but also has a vulnerable distribution model.
Over the past few months some things have occurred which may determine the outcome of this battle royale. First the Netflix move. As reported by the WSJ, Comcast will begin bundling Netflix subscriptions within its cable offering. Right now you can access your Netflix account through Comcast’s Infinity X1 platform, but that still requires users to buy a stand-alone Netflix sub. By making the streamer a premium option within customers’ cable packages Comcast will add Netflix to its normal monthly bill and then rev share back the subscription proceeds. Think of paying extra for HBO or Showtime right now – Netflix will work with Comcast in the same way. The partnership should be a win-win for both parties. Comcast gets to include the crown jewel of video streamers in their cable offering while still “controlling the bundle”. Netflix also wins with an easier way to plug in their service to Comcast’s 100M+ household footprint, which will undoubtedly drive up subscriptions.
With all the Com-Net newlywed bliss going on you’ve gotta figure the Mouse across the street is taking notice. As explained by The Atlantic, Disney’s legacy business model is struggling due to ratings challenges at ESPN and ABC, and the slow-but-steady erosion of movie release revenue. In the face of these challenges we’ve already seen Disney make its first counterpunch with the proposed acquisition of 21st Century Fox (which is still pending DOJ approval). If the Mouse gains control of the Fox (apologies for the animal reference overkill), it’ll give Disney enough content for its own video streaming service to compete with Netflix. The new entity, working title “Disneyflix”, would have more than enough exclusive content to drive their own subscriptions and threaten Netflix.
So here’s the bottom line . . . right now we’re seeing both Netflix and Disney make moves to get into each other’s wheel houses. Over the next year or two the battle for control of video entertainment’s next iteration will play out. Who will win is anyone’s guess.