Disney and Chill?

Video streaming has surpassed traditional TV in media consumption as shown by the wild success of Netflix. The only problem with being such a successful company in a relatively new industry is the massive number of other firms who want in on the profits. Since Netflix first transitioned from a DVD mailing company to the streaming giant they are today, many firms have rolled out their own competing streaming services. Some of the most notable are Amazon video and Hulu but now, even more companies are working to enter the industry. Apple, T-Mobile, Comcast, and Disney will all be launching competing services with Disney’s coming later this year. These services will all essentially do the same thing, so where does their competitive advantage come from?… Exclusive content.

Netflix may have started with their sole focus on streaming, but they quickly pivoted to content creation. They spent a remarkable 8 billion dollars on exclusive content in 2018 and show no signs of cutting back. Their ability to produce content has helped them stay relevant and the industry leader even as other entrants compete for the same consumers with similar services.

Hulu is beginning to close the gap with their critically acclaimed show “Handmaidens Tale” but as of yet, Amazon has not found its own must-see TV show. That being said, they are currently developing a “Lord of the Rings” TV adaption which is anticipated to make them more competitive.

Disney, however, has the potential to disrupt the industry. Because they as a company began by creating content and are pivoting to streaming, rather than follow the pattern of most other competitors, they are endowed with a unique advantage. Disney has decades upon decades of content which they will make available on their soon to be released platform “Disney+”. Disney has done an incredible job situating itself with their ownership of Lucasfilm, Marvel Studios, and ABC. These studios have already created countless hours of content with the promise of more on the way.

The issue presented by this new service is that of a budget constraint. As a consumer, subscription costs add up quickly, especially now that Netflix will be raising prices yet again. This price change reflects the costs of producing so much content and this will only be exacerbated as Netflix begins to directly compete with the powerhouse of Disney’s various studios.

Netflix as well as Hulu and Amazon will be forced to increase spending on content as they work to produce media which can compete with Disney. This in turn should drive up subscription prices, making the consumer even more conscious of which services they are willing to pay for on a monthly basis.

Disney+ launches on November 12th, 2019 with a monthly price significantly lower than the competition. It will be incredibly interesting to watch the industry evolve as companies fight to survive and potentially consolidate. As a result of these soon to be content wars, we as consumers should be in for some incredible films and TV shows as companies work to stand out amongst the crowd. The streaming industry will be forced to evolve, and we are fortunate enough to watch it happen (on our devices, from the comfort of our homes). What a time to be alive…

About Declan Peloso

Declan is a second year Economics and Business student, focusing on finance at the University of Puget Sound

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