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Disney's purchase of Fox should make Netflix very nervous
- Disney will give over $50 million in stock to current Fox subscribers to pay for the deal.
- Assuming it is approved by regulators, the deal could be completed in 12 to 18 months.
- Disney will control tons of content that it can use for its own streaming service, which could threaten Netflix.
After weeks of rumors, Disney finally made it official earlier this morning. The massive entertainment company is about to get even larger with the purchase of much of the content and networks of 21st Century Fox. Disney will give a total of $52.4 billion in stock to Fox shareholders. In return, Disney will take control of tons of content properties, including major “geek” franchises like The Simpsons, Alien-Aliens, Predator, Avatar, The X-Files, and much more.
Much has already been written about how this deal will finally bring the Marvel TV and film rights that were owned by Fox, like the X-Men, Deadpool, and Fantastic Four franchises, to Disney. This means that, potentially, we could finally see those Fox-Marvel characters interact with those in the hugely popular Marvel Studios film and TV series.
Having all of those hugely popular films and TV shows under one roof will only provide more content for Disney's already announced streaming service, which is supposed to go live sometime in 2019.
However, we think that the Disney-Fox deal could also be perhaps the largest threat to Netflix. Having all of those hugely popular films and TV shows under one roof will only provide even more content for Disney’s already announced streaming service, which is supposed to go live sometime in 2019. Disney confirmed earlier this year that its agreement to stream its newest films, including its Marvel and Star Wars properties, on Netflix (after their theatrical and Blu-Ray debuts), will end in mid-2019.
Now that Disney will soon control the rights to more content than it could potentially use on its streaming service, that could leave Netflix with perhaps its biggest competition yet. Its last quarterly financial numbers showed that the company continues to add paid subscribers at a rapid pace, with over 109 million worldwide, and over 52 million just in the US. Even a recent announcement that it would raise the price of its standard service by $1 to $10.99 a month did little to no damage to the company. People just love Netflix.
However, they might love it a lot less once Disney starts pulling not just its currently owned content from the service, but any Fox-owned properties as well. Imagine being able to sign up for Disney’s service and watch your favorite Marvel, Star Wars, Disney, and Pixar movies and TV shows, as well as The Simpsons, all the X-Men movies, and much, much more. We will also note that this deal includes Fox’s share of the Hulu service, which will give Disney a majority ownership of Hulu. It’s unclear just how this will affect Hulu in the long term.
Netflix has been using its huge amounts of cash to secure its own content deals.
That may be one of the reasons why Netflix has recently been using its huge amounts of cash to secure its own content deals. Many of its hit TV shows were actually produced by outside studios, including its own successful franchise of shows based on Marvel properties like Daredevil, Jessica Jones, and most recently The Punisher. Netflix, naturally, wants to be able to develop properties that it owns the rights to completely, so it has begun securing deals with top content creators.
That includes acquiring Millarworld, the comic book business originally formed by writer Mark Millar. Originally, he wrote comics for Marvel and DC, and helped to create stories that served as a ton of inspiration for many of Marvel’s hit films. With Millarworld, he co-created popular comics like Kick-Ass, Wanted, and Kingsman: The Secret Service that became successful film properties.
The truth is, however, that it’s a lot harder to create new, successful entertainment franchises from scratch when there so many established ones that are doing just fine, thank you. Disney knows this and continues to expand (some might say exploit) its properties like Marvel Studios, Star Wars and others, and there may not be a lot of room for new ones to take their place. Disney, and its CEO Bob Iger, knows this, and wants to make sure that as many established properties are under its control, and that means they can be available for its own branded streaming service.
While the Disney-Fox deal is still a ways away from closing, you have to think that Netflix is making plans to ensure that it can keep its subscribers from jumping ship by making its own properties as good, and as popular, as possible. Only time will tell if the established entertainment powerhouse of Disney will prevail, or if the smart upstarts at Netflix can continue to grow and expand without easy access to Disney’s properties.
What do you think of Disney’s deal to acquire much of Fox? Do you think it will be good or bad for the entertainment industry? Let us know your thoughts in the comments!