On Friday, Disney and Fox shareholders approved the $71.3
merger that will transfer Fox’s 20th Century film and TV studios, a
30 percent share in Hulu, and cable networks (FX Networks, National Geographic)
to Disney when the deal is completed in the first half of 2019. Next year will be a transformative year for
Disney. In addition to this deal
closing, the media giant will launch its own direct-to-consumer streaming
service consisting of live action and animated movies, and end its three-year
exclusive distribution agreement with Netflix.
Owning the relationship with the customer is a critical part of Disney’s
[slight] pivot away from being the anchor tenet (with ESPN) in the Pay-TV
bundle.
When it terminates its agreement with Netflix, Disney loses access
to over 100 million global (52+ million U.S.) subscribers and the associated
licensing revenue. Can it make these
losses up with a sufficient number of its own subscribers willing to fork over
$X.XX per month? I’m not sure! After Netflix, the largest streaming services,
by number of subscribers, are Amazon, Hulu, and HBO Now. Disney most closely resembles number four,
HBO, a firm that is trying to continue to monetize a position on the pay-TV
bundle while carving out a “go it alone” path.
HBO Now had only 5 million subscribers in 2017. Disney will need a way more subscribers than
that to make this new strategy work.
|
Top
Streaming Services in 2017
|
Number
of subscribers (millions)
|
|
Netflix
|
52.8
|
|
Amazon
|
26.0
|
|
Hulu
|
17.0
|
|
HBO Now
|
5.0
|
|
Showtime
|
2.5
|
|
CBS All Access
|
2.5
|
|
Sling TV
|
2.2
|
|
Starz
|
2.0
|
|
YouTube Red
|
1.5
|
|
DirecTV Now
|
1.0
|
|
Hulu with Live TV
|
0.5
|
|
PlayStation Vue
|
0.4
|
|
YouTube TV
|
0.3
|
|
fuboTV
|
0.1
|
Source: eMarketer
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