Issue of the week: the battle for Hollywood
A Silicon Valley upstart has revolutionised film and TV. But established players, led by Disney, are fighting back
Netflix, the online film and TV streaming service, recently made the first acquisition in its 20-year history, said Marketwatch.com. The company has snapped up Millarworld – the Scottishbased firm founded by “comic-book legend” Mark Millar, the creative force behind blockbusters including Kick-ass and Kingsman. The move is central to Netflix’s quest “to operate more like a Hollywood studio” by producing more of its own content. In particular, it hopes to emulate the success of Disney’s 2009 buyout of Marvel (home to characters including Iron Man and Captain America) which helped transform the fortunes of the “House of Mouse”. There’s just one problem: Disney is fighting back. Last week it outlined plans for its own streaming service and said it would eventually cut ties with Netflix completely. “Say goodbye to Tinkerbell or Pete’s Dragon playing on a loop for your toddler.” No wonder “parents are howling”.
This news should surprise no one, said Stephen Witt in the Financial Times. Netflix and Disney have been “infringing on one another’s turf” for ages. “Some time this year, the Hollywood legend and Silicon Valley upstart realised they were wearing the same dress to the party. Now it’s war.” Netflix faces a formidable opponent: Disney boss Bob Iger has been “a canny buyer of
media assets” that enhanced his company’s classic properties. But although Netflix’s stock tumbled on news that “those beloved characters” will begin to vanish from its screens, it actually has “nothing to fear” from Disney, because people love watching rubbish TV as well as the quality stuff – and Netflix is brilliant at providing the latter. “Disney can bring the magic”, but its “cherry-picked collection of immortal media assets can’t compete with Netflix’s sprawling mountain of garbage”.
Disney’s “gamble” on streaming is perhaps its “biggest test in decades”, said Ricardo Lopez in Variety. And every other studio will be watching the experiment closely. But while Netflix has changed the game – not least by introducing viewers to “binge-watching” and by establishing itself as a “critical force” (it plans to spend $6bn on content this year) – it has vulnerabilities, said Matthew Garrahan in the FT. Rapid growth and 100 million subscribers have propelled its market value to $74bn – more than big media companies such as 21st Century Fox and Viacom. Although the company is profitable, “it borrows heavily”, which worries analysts given the extra firepower needed to take on Hollywood and the likes of Amazon. The streaming pioneer is still growing. “But there is a target on its back – and it is getting bigger.”