Stream Wars: can Netflix survive the Disney juggernaut?

Attack, attack, attack!

This year, Disney, Apple, and the AT&T-owned WarnerMedia (a combination of content from HBO, Turner, and Warner Bros Film Studio) are releasing their own streaming services. But are they offering us anything new? Or simply blackmailing us by smash ’n’ grabbing their content back from the original streamers? The answer is: a bit of both.

Apple and Warner have kept their cards relatively close to their chest with what they will be releasing but their next moves will have massive ramifications for Netflix. A good indicator is that Warner own one of Netflix’s biggest products: Friends (yep, even despite Gen X finding many of the more dated gags problematic, it’s still MASSIVE and a big draw).

Last year, having surveyed more than 2,500 viewers in the UK, Ofcom stated that Friends was the most watched show on Netflix. There is no surprise therefore that Netflix have been prepared to pay $30 million a year for the rights to show the programme on its platform. They are now however willing to pay $100m just to keep Friends for one more year whilst Warner figure out what’ll happen after this point. When they do make this decision, the game will change exponentially.

Apple will focus their streaming platform on brand new content and they are going in big. They will premier shows starring the likes of Reese Witherspoon and Oprah Winfrey while premiering the new series from Peaky Blinders creator Steven Knight. They have also made deals with HBO, Showtime, and Starz to license ready-made content too. The main difference between Apple+ and WarnerMedia, as opposed to the likes of Disney+ is that we don’t yet know if or how much content will be stripped from existing platforms. With Disney, they’ve already started taking their content down from Netflix and have announced that they will plan to become fully exclusive.

The Observer reported that “Disney’s current deal with Netflix ends in 2019, while Fox’s existing deal with HBO stretches until 2022. Disney realizes that the future will be built around direct-to-consumer content creation and distribution, and it’s willing to forgo the estimated $350 million in annual revenue it receives from Netflix.”

Disney keeps on coming

Armed with their long standing domination of theme parks, cinemas, and essentially our childhoods, Disney just keep acquiring, producing, releasing and repeating. In recent years they have acquired Marvel, LucasFilm and most recently Twentieth Century Fox, as well as Fox’s stake in Hulu – with Comcast’s shares too it looks like Disney is calling the shots for Hulu now. The arrival of Disney+ at $6.99 a month shows us that perhaps they are in now their ‘End game’ (See what we did there? No spoilers, we promise!).

Disney has been on a run of hugely successful films, from Frozen to live action remakes of classics like Beauty and The Beast, Aladdin, and The Lion King, to Marvel’s multi-billion-dollar-cinematic-universe to Star Wars. And they keep improving. Star Wars: The Force Awakens became the highest grossing worldwide opening weekend of all time ($528,966,675). That was topped by Avengers: Infinity War ($640,521,291), which has now been topped by Avengers: Endgame ($1,223,641,414), now on course to become the highest grossing film of all time. On top of this, with their acquisition of 20th Century Fox, Disney will now be releasing the Avatar sequels in addition to more Marvel and Star Wars films.

With billion-dollar results coming in regularly, we don’t blame them for having the confidence to demand a streaming audience all to themselves. But what does this mean for Netflix, and more importantly, what does it mean for the streaming industry?

Cause and effect

Netflix’s model of buying pretty much everything from anyone that’ll sell while also investing big into their own original content is clearly working. They have recently announced their highest rate of membership in 12 years. But at the same time Netflix increase their debt by a whopping 70% a year! If you think that organised chaos is nuts, imagine what’ll happen now its suppliers are becoming competitors and hiking their prices.

On top of that, imagine how much more content they’ll commission seeing as there’ll be a Disney and potentially Warner-sized hole in your Netflix and Amazon Top Picks. Mark Sweeny writing for the Guardian says that: “Netflix original productions in the US make up only about 8% of the hours of content available in its vast library, and 9% in the UK. In addition to this figure, a further 5% of hours is labelled as original by Netflix because it airs it first, but is actually acquired from content suppliers, such as Star Trek: Discovery...”

These ‘fake’ Netflix originals are therefore up for grabs when their deals come to an end. Netflix relies heavily on its purchased content as it stands and every time a competitor makes a move, Netflix’s answer is to spend more (and more recently, to hike our subscription fees). Ever since Amazon announced its hugely anticipated Lord of the Rings series and shouted that they would spend £5bn on new content, Netflix added 50% to their own content budget (from $8bn to $12bn). If Netflix keep going this way, will the bubble burst? And how will it stay on top of the tree with so many new kids on the block appearing and demanding their content back?

Another take

Netflix made its name with well-scripted and stunningly made original content. However, they have started to acquire cheaper, unscripted shows such as the likes of reality favourites Love Island and The Circle. We believe that the key for Netflix to stay on top is to produce more well-made content with the most exciting, fresh voices, while gearing their output towards adults. ‘Family friendly’ and Disney go hand in hand, and Netflix/Amazon might as well accept defeat here as millions of families will be migrating straight over to Walt’s Main Street when Disney+ arrives. Once they accept inevitable defeat here, they can essentially double down on their more adult content, honing it so that one day their programmes can be spoken of in the same breath as HBO’s classics.

“What?” we hear you say, “Stranger Things, The OA, and Ozark are awesome!” Yes they are, my friends, but think about it - not one of those series even comes close to The Sopranos, The Wire or even Game of Thrones.

Another thing Netflix can do is to grow a pair, quite frankly. We need a risqué remedy to Disney’s squeaky cleanliness and judging by the way Netflix pulled this comedian’s show where he criticises Saudi Arabia, they’re currently not stepping up.

It’ll be interesting to see when, where, or if the audiences go elsewhere in great enough numbers to ruin the Netflix charge but ultimately, like the English Premier League, depressingly, it all comes down to who has the most money. It might surprise you but with a market value 6 times bigger than Netflix and 4.5 times the size of Disney, perennial second choice streamers Amazon could end up the winners here. With their financial clout, and head start in sports, Amazon can observe, let the main battlers go at it, and then, like the army of the dead in Lord of The Rings, batter everyone in sight at the very last moment.

Richard Broughton, an analyst at Ampere Analysis, agrees while adding further good pointers: “If I had to put my money somewhere it would have to be on Amazon. New players like Disney and WarnerMedia will need a lot of time and marketing to break into households, and who else will want to licence content to them? Amazon has the deepest pockets. Its catalogue is by far the largest, even if a lot of the content is quite old, and it has been exploring sports rights and areas other players aren’t.”

The greatest show?

This is all well and good, but what does this mean for filmmakers and consumers?

For filmmakers, it is absolutely amazing. Never before have we seen so much money being thrown at content, meaning more opportunities to write, pitch, and create. Right now for Disney, Apple, Netflix, Amazon, and AT&T, it’s looking like they value quality but the priority is quantity as they battle to mop up anything that may have a potential audience.

Like fast food chains, Disney especially is planning to serve its (very large) audience with the unhealthy amount of filmic sugar. Disney will also be expanding its already maxed out Marvel and Star Wars universes with unnecessary spin-offs. The Mandalorian and Hawkeye will be their flagship releases, but there’s talk of further spin-offs for the likes of Loki, Scarlet Witch, Vision, and Rogue One characters, which have all had plenty of screen time in the Thor, Avengers, and well, Rogue One films already.

Here at Wing we’re not so sure how long a Marvel and Star Wars diet will last - Netflix’s Marvel superhero spin offs are near all but cancelled (Daredevil, Iron Fist, Punisher, Jessica Jones etc.) so unless we see something genuinely fresh from the new kids on the streaming block, we see the audience sticking with Netflix... with Amazon waiting to be crowned supreme leader in the very near future.

Martha Evans, Client services manager at Wing London.