Monday, August 10, 2015

Will Disney buy Netflix and why?

Written by James de Rin 

In my last article on Netflix I hypothesised that Apple might buy Netflix for its ecosystem and I ended my article by saying that Amazon might merge Netflix with Amazon prime and use the superior platform and ease of use. What was I thinking. In the last few days Disney's stock has tanked to $108 a share from $122 a share (now it's coming back at $111 a share )because of the new trend (sorry speeding up trend) of unbundling here in the U.S. More and more consumers just consume content through their iphone or android or iPad or laptop. It is no longer bizarre to see people watching content on a train in a Los Angeles Starbucks or at home on their device or on the London tube. The television is becoming extinct. Being forced to watch 175 channels of which you only watch 4 and with nothing worth watching on the television the broadcasters have missed the trend by living in the past like a dinosaur. Now. My point is ESPN was the juggernaut that kept Disney cash pouring in, just like HBO for Warner Bros but what we are witnessing is concentric rings of interest. where a human watches what they want to watch when they want to watch it. The disrupters get this and offer the consumer content on the consumers terms. Well Disney has recently struck more and more deals with Netflix to distribute content and Netflix gets older content from Disney which is not competing with dinosaur content distributors. But just imagine if Disney I mean Bob Iger the genius behind the acquisitions of Star Wars, Marvel etc took one last gamble and created an apple type ecosystem for his content. If Disney bought Netflix and it wouldn't be cheap $52 billion this week he could grow his pipeline of content into future platforms using Netflix. I had a theory that the telcos who own the delivery system would end up owning content as people want content not necessarily the branded pipelines. But Disney creates content and content is king but only if you own the distribution of it the platform. More and more platforms will appear all doing the same things with content but Netflix has left the gate first and has momentum. It may not have the latest content but that is only a matter of time and with Disney's help it would compound. So what in god's name does this have to do with crowd funding or crowd sourcing. Well Disney has its brands which turn out tent pole movies which cost $100 million and upwards what it doesn't have is a kickstarter for content. WIth a Netflix purchase it has analytics which tell you what you like, where you live, how much you watch it, who your favourite actor is, your blood type just kidding in other words it is research and development to crowd fund content with a platform and a new business. Kickstarter has done a great job of funding new film makers and existing celebrity filmmakers what Disney and Netflix can do is make stuff that concentric rings of interest want to watch other than the big tent pole movies. If the studios and Hollywood agents could back every horse they would own it all but what we are now seeing is that You Tube is becoming the place where you post your ideas, your video, your story and see if there is an audience once you have an audience Hollywood offers you a deal you can't refuse but what Netflix does is monetise it in 100 countries with an audience of 65 million people who then binge on it like it's an all you can eat content buffet. 

This is just my opinion and every one has one...but let's see if Disney does buy Netflix because if they don't
Netflix might just buy Disney one day!