“The Disney Store” and Netflix

On August 14th, 2017, Variety’s Todd Spangler wrote a piece concerning the Walt Disney Company’s decision to pull their films from Netflix.  While this may at first sound troubling, according Piper Jaffray & Co. analysts Michael Olson and Yung Kim, who conducted a survey of 538 subscribers to the internet giant and noted that only one-fifth of time was spent watching Disney films. Also, “Netflix pays about $200 million per year to Disney, analysts estimate. That may sound like a lot, but it’s only around 3% of Netflix’s total projected content budget of $7 billion for 2018” (Spangler 2017).

The analysts said that they recognized the strength of Disney, however, “…we believe Netflix can license similar genre content from other sources and/or use the cost savings for original programming” (Spangler 2017). The issue here is that there are several companies that produce animated content, known as “The New Big Five” (in reference to The Big Five, the movie studios who had the largest output of movie content for most of existence of American film), which are as follows:

  • The Walt Disney Company (specifically: The Walt Disney Animation Company and Pixar Animation)
  • Universal (Illumination Entertainment)
  • Sony Animation
  • DreamWorks
  • BlueSky Animation

In recent years, the only studio that has become close to what Disney possess in terms of content on Netflix is DreamWorks, with most of their content focusing on the Shrek and How to Train Your Dragon franchises, with spin offs and cheap shows made specifically for Netflix. In terms of quality, there is only perhaps Illumination, which broke out a years ago with the Despicable Me series and BlueSky, which is a contemporary of Pixar Animation.

The problem with Netflix, and particularly with this Disney deal, is that it is not focused on the consumer, but rather, profit and debt trouble. Netflix has, as of this writing and of the current data, which covers the first quarter of 2017, to be around $15.3 billion of total content obligations and $3.4 billion in debt. No wonder Disney is backing out. In terms of the consumer, the Disney content is… rather disappointing, being populated with mediocre sequels that dominated the television screen and Blockbuster shelves of the early 2000’s and the Disney Channel fare instead of the financially successful films (there are only three notable ones: Zootopia, Rouge One, Finding Dory). If Netflix were to acquire the classic Disney films, particularly the ones that made money (pick any of the Walt Disney directed ones and Robin Hood), it would rejuvenate the slump of animated films in terms of streaming and would give families, the largest demographic who watch the Disney fare on Netflix in the first place, a wider (and better) selection. Granted, this all has to do with rights and what Disney is willing to allow Netflix to stream; however, it would not exactly be a far reaching idea to have most of the traditionally animated Disney films on the streaming service. Then again, this is perhaps why Disney is venturing on their own… which is a problem.

Similar to how fast food restaurants came into serving breakfast, particularly with McDonald’s coming to mind, after the success of the venture, other restaurants dipped their feet into the idea, but some did so too late. In this example, Netflix is McDonald’s, Disney, may in fact be the late-comer. The problem I foresee with the Disney streaming service is that it only streams Disney films and there will most likely be a fee of $12. The reason I am placing the arbitrary number of $12 is because people will pay more to view content that appeals to them (i.e. families) and $12 seems like a nice number to begin with, nice and even. However, $8 is cheaper and offers a wider selection from various places. Which is better to pay, $8 or $12? I highly doubt that Netflix will loose a large amount of subscribers because of the decision made by Disney; however, it could possibly set a trend for other companies to go at it alone as well; after all, it is the Walt Disney Company we are speaking of here. What this means is that for the loyal Disney fans, it will either be a dream come true, or a dismal nightmare due to the war for content. Disney has plenty of content to maintain a streaming service, but the issue is that Disney may not have enough to keep that interest.  What may occur is people flocking over to Disney and becoming dissatisfied with just one provider of content… and then other companies, like DreamWorks, doing the same thing and in a few years there will be multiple streaming services for companies. Instead of a grocery store of content, you now have specific “stores” of content, which brings me to The Disney Store.

The Disney Store is great. It has basically everything a Disney fan might ever need in his or her life expect for perhaps Passholder passes to every Disney theme park on the earth. While, I do not have a problem with The Disney Store, I do have a problem with the virtual Disney Store; namely, while it seems like a fantastic idea to have a single service for just Disney fare, it is not exactly the best idea in practice. Just like the actual Disney Stores, this virtual store is going to have a rough go at first, but it will eventually make profit, except there’s one issue- the quality of goods. There are only 387 Disney Stores in the world and most of their revenue takes place online through their website. Likewise, with this virtual store, with so many streaming services, Netflix, Hulu, Amazon Prime, just to name the juggernauts, taking the attention spans of consumers, it shall most likely be a good idea with a very quick death due to the very thing that helped create the idea- Netflix and the Internet.

Still, this is all speculation and until the service is announced, it shall speak for itself.

Final prediction: The Disney service will last five years before being closed and Disney making another deal with Netflix.

 

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