Jack of All Trades, Master of...All?
From animated cartoons, to black-and-white films, to 3D, the media industry always finds a way to outdo itself. Over the last decade, the increase in technology has left media companies with a decision to make: focus on the broadcasting of live events or on the streaming and production of original content.
Most companies have chosen to allocate to only one strategy. As a result, companies that were once viewed as elite have failed to keep up with the competition. Twenty-First Century Fox, with a rich history of classics such as Ice Age, Prison Break and Taken, is a great example. Fox was one of the most successful companies in the media industry; however, due to increased competition, it felt that acquiring British broadcaster Sky was necessary in order to keep up with the competition and continue growing into a more global company. After losing a lengthy bidding war with Comcast, who ultimately acquired Sky for $39 billion, Fox decided to change their strategy. Instead of looking to expand, they were looking to be acquired. In March 2019, Fox was acquired by Disney for $71.3 billion.
In the last five years, Netflix’s stock has grown by 800%, generating $15.79 billion in revenue last year. HBO added over five million subscribers in 2017, and Apple’s TV Streaming Service is projected to generate $10 billion in revenue in 2020. These are all signs that the streaming route is the way to go. It seems Netflix’s stronghold on the streaming industry is at risk, just as Fox’s dominance over traditional television was, due to increasing willingness to spend, spend and spend some more. According to Variety.com, Netflix plans to allocate at least $15 billion toward content in 2019. HBO has budgeted $15 million for each episode of the final season of their award-winning show Game of Thrones. Apple plans to spend $1 billion on original content. But what about Disney? How will the beloved, storied franchise keep up with the pack?
Disney has approached this dilemma in a unique way by investing in both strategies. Disney owns Pixar, Marvel, Star Wars and a majority stake in ESPN. In 2018 alone, Disney reported a net income of $12.6 billion, a 40% increase from 2017. Disney also released plans for their own streaming platform, Disney Plus, which is scheduled to debut in the United States in November 2019. With a subscription fee $6.99 per month or $69.99 annually, Disney plans to undercut Netflix’s price of $12.99 a month. Disney is also looking to expand their service to Western Europe and Asia by early 2020.
Additionally, through their stake in Fox, Disney owns a 60% share of Netflix’s rival Hulu. Disney CEO Robert Iger announced during Disney’s annual shareholders meeting that the company plans to help Hulu with its goal of international expansion and may even consider buying a greater percentage of the company, if offered the opportunity.
The goal for the near future is to create a service in which customers could easily access the content of ESPN, Fox, Hulu and Disney, and will likely include a discount for a bundle of the services. With this platform in place, Disney can deliver content for all ages, with Hulu targeting adults, Disney still focusing on kids, Fox catering to teens and ESPN to sports enthusiasts. Disney executives have been optimistic that their strategy of blitzing the market will be successful.
In an industry where change is constant and the complacent are acquired, it’s difficult to predict the outcome of this industry when the dust ultimately settles. Companies that were once powerhouses have crumbled and have been replaced with innovative start-ups. But one thing is for sure, Disney will be with us in our adulthood, just as they were in our childhood and teenage years.