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Disney Wants to Buy Netflix?

By Ryan Scott — November 14th, 2016

It looks like Disney isn't going to be content with ruling Hollywood and the box office for the foreseeable future. They have their eyes on a much bigger picture and it looks like that picture may include Netflix. A new rumor suggests that the House of Mouse has its sights set on purchasing the streaming giant, giving them yet another massive leg up on the competition.

The rumor comes courtesy of Tech Crunch and suggests that Disney's next major purchase may very well be Netflix. In recent years under the direction of CEO Bob Iger, the company has made some landmark purchases that have helped them become the major force they are in the industry currently. Back in 2009, Disney purchased Marvel, now home to the seemingly failure-proof cash cow known as the Marvel Cinematic Universe. In addition, they purchased all of Lucasfilm in 2012 for more than $4 billion, primarily so they could make Star Wars movies until long after most of us are dead.

Disney also owns ESPN and ABC, but those are very much traditional distribution platforms. More and more people are looking to cut cords and do away with cable and/or satellite. So purchasing Netflix would give them a major play for the future and allow them to have a distribution platform that will be able to live on much longer than traditional cable television at this point. It is also probably a lot easier and practical (assuming you have the amount of money that Disney does) to purchase Netflix instead of starting their own streaming service and trying to gain their own subscriber base. Here is how Tech Crunch explains it.

"In Netflix, Disney would get the mother of them all - the largest global OTT (over-the-top) video footprint (by an order of a magnitude) and the one premium OTT brand that is universal. Oh yeah, don't forget to sprinkle in Netflix's invaluable data platform (and the smarts to use it) that remain a complete mystery to virtually all traditional media execs. Even mighty Disney, on its own, can't build that package."

Disney and Netflix already have a positive and lucrative relationship. Back in September a deal finally went into effect that was made between the companies several years ago that gives Netflix exclusive rights to all new Disney movies. Essentially, the movies will be available exclusively to stream on Netflix for the same period of time that they would usually be shown on standard cable TV, so though the movies will eventually find their way to more traditional outlets, it will be an even longer wait than usual. The deal didn't come cheap though, as Netflix is reportedly paying hundreds of millions of dollars per year for the rights to all of Disney's theatrical releases from 2016 and beyond. So really Disney would be trading in the revenue stream that Netflix gives them now for their entire revenue stream but more importantly, their platform.

It is no secret that streaming services are the wave of the future when it comes to TV and movie distribution, and it is even less of a secret that Netflix is the king in terms of subscription streaming services currently available to consumers. Their earnings have been down slightly, but much of that has to do with the tremendous investment they are making in original content lately. Yes, HBO NOW, Amazon Instant and Hulu have found their way in the game and have their own benefits, but Netflix is still ahead of the pack, specifically in terms of their subscriber base. On that front, it isn't even close, so if Disney is going to purchase a streaming service, why not Netflix? They are the biggest studio in Hollywood, so it would follow that they would go after the biggest name in the game.

This is still just a rumor, but it seems like Disney is destined to make a play for a streaming service at some point. The industry is in the middle of a big shakeup after AT&T made an astoundingly huge $85 billion acquisition of Time Warner. AT&T is going to make use of that new resource and will soon launch a $35 a month service called DirecTV, which will allow users to stream around 100 live, premium cable channels. That is something Netflix doesn't offer. More to the point, it is another big step forward in the cord-cutting revolution.

Companies like Disney are going to have to find a way to compete in the new media landscape and It is clear that Disney likes to be in control of their own destiny. It is unclear how Netflix would change, if it would change at all, should Disney actually make the purchase. For starters, it does open the door for Disney to unleash a lot more of their vast library on the platform, which would surely make fans happy. We will have to wait and see how this all shakes out, but if this does turn out to be true it is a huge deal and will represent a major power shift in Disney's favor. If they can treat Netflix as a company as carefully as they have treated properties like Marvel and Star Wars, it should ultimately be a good thing for consumers.

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