Disney has finalized its $71 billion deal to acquire 21st Century Fox and all its assets. The deal could be a game changer in the media landscape. Disney will now consolidate a significant amount of content under its roof including very popular franchises like Star Wars, Spider-Man, Cinderella etc. The $71 billion deal also paves the way for Disney to finally launch its streaming service. The company is looking to take on Netflix, a streaming service that has dominated this industry for the past few years.
Disney believes that superior content could be crucial in attracting subscribers. The company hopes that acquiring Fox will place it in a better position to compete with major tech companies that are also getting into the streaming industry. The new platform will be known as Disney Plus. According to Disney CEO Bob Iger, the platform, as well as other direct-to-consumer businesses, will remain top priority at Disney for the time being.
The media industry has become very competitive. Consolidation is, however, a common strategy for companies to retain their market share. As a result, cable and telecom companies have been trying to acquire content producers as part of their strategy. The logic here is that, if you control the content, then you have an edge especially in the direct-to-consumer business model.
Major deals have already been announced too. For example, AT&T confirmed the acquisition of Time Warner last year in a deal that was valued at $81 billion. The acquisition was opposed by the federal government’s antitrust office through a lawsuit filed in Washington. The suit was, however, dismissed. AT&T has already launched its own streaming service that charges $15 a month. This is the same approach that Disney is taking.
The long term goal is to have top of the line content that appeals to a bigger portion of the market. In addition to this, the company will also get a controlling stake in Fox’s streaming service Hulu. Disney said that it intends to keep the platform operating alongside Disney Plus. However, Hulu will largely be used for general programming. All of its family-friendly programming will migrate to Disney Plus. It’s still not clear how much people will need to pay for a Disney Plus subscription. However, the platform is expected to feature a total of five categories. These categories will include Disney, Pixar, National Geographic, and Star Wars.
Nonetheless, it’s very likely that the pricing will be quite similar to the rates charged on other platforms. After all, if Disney is serious about competing with Netflix, Amazon, and other major streaming services, it cannot afford to price out consumers with high monthly subscriptions. Analysts think that the streaming market is becoming saturated. Netflix already has over 55 million subscribers in the US. Its global subscriber base is also above 100 million users. Disney will need to work very hard to pull some of these people towards its platform. Besides, Netflix has also invested a lot of money in developing its own content and a number of hit shows are already available on the platform.