Disney intends to acquire Netflix, a content "kingdom" is emerging

Recently, foreign media exposed a rumor that an industry giant will be acquired: Disney, whose global box office has just exceeded 6 billion yuan, plans to acquire the American streaming media leader-the only fee-paying site among the world's top ten video websites, an online video rental provider Netflix., and Netflix CEO Reed Hastings is expected to become Disney CEO after Robert Iger retires in 2018.

Original title: CEO of Netflix, the only fee-paying site among the world's top ten video websites, or successor Disney to jointly build a content empire?

According to data, Netflix's market value is approximately US$44.2 billion. Compared with the streaming media field where websites such as Amazon, Hulu, and HBO Go are located, Netflix has become one of the best among them with popular original content such as "House of Cards","Making Murderers","Stranger Things", and "Drug Lord". Third-quarter revenue exceeded Wall Street expectations, and the number of overseas subscription users also saw significant growth. Netflix is expected to increase its content production budget to US$6 billion next year and will continue to launch more high-quality original content. If Netflix is acquired by Disney, it means that the website will have exclusive rights to all Disney content products, including content from the Disney Channel and Disney XD Channel.

Previously, Disney and Netflix have collaborated on original TV series such as "Daredevil","Jessica Jones" and "Luke Cage", and have reached a cooperation on the production of Marvel's new series "The Defenders". A number of Disney films, including "Zootopia", have also entered the Netflix broadcast platform.

Competitors are fierce, and Netflix'

s advantages in paid exclusive content cannot be underestimated in terms of strength and number. As more and more companies enter the OTT field (Over The Top, Internet companies leapfrog operators to develop various videos and data based on the open Internet) services) have become no longer obvious.

For example, Amazon Prime Video, the biggest competitor, is coming on. In addition to homemade audio and video programs, it is no less expensive than Netflix in purchasing content rights. Excluding drama series, Amazon's movie and TV libraries are even twice as large as Netflix's library, offering much more options than Netflix. Amazon currently has original series such as the Golden Globe Award-winning drama "Transparent Family" and is also working with Netflix's Epix studio, which has terminated its contract, in the hope of producing more new shows. Amazon invests a lot of resources into its own content. In order to protect Prime Video from interference from competitors, it even stops selling Google TV sticks, Google Chromecast and Apple TV. It is not difficult to see how much Amazon values Prime Video! Netflix should be a little shaky.

The competitor is very strong, and there is more than one.

Although Netflix's subscription rate in the United States is currently 43%, video and video streaming platforms such as Amazon Prime Video and American video website hulu have emerged one after another, accounting for 22% and 9% respectively. Hulu and Amazon Prime Video have also invested in developing original audio and video content in an attempt to carve their own way in the market. The advantages of Netflix's homemade audio and video content are not as good as before. Even Sky Movies, which focuses on movies, has launched a monthly movie streaming service on Smart TV for US$8.99, providing a newer movie library than Netflix.

Disney's share price fell, and revenue fell short of expectations. Seeking acquisitions means exporting

Netflix no longer has exclusive advantages in paid exclusive content. It needs to seek cooperation and find new breakthroughs. Disney also needs new blood in the cable TV business sector. Affected by declining ratings from ESPN, a U.S. cable network that specializes in sports programming 24 hours a day, Disney's share price fell, and revenue from the cable TV business segment fell short of expectations.

ESPN is facing severe challenges in the traditional television field. In order to solve its lack of success, its parent company Walter. Disney announced a $1 billion acquisition of a 33% stake in BAMTech, a huge bet on video streaming that marks the beginning of Disney's migration from traditional cable television to digital media.

BAMTech is a fast-growing technology and streaming company formed by MLB in the Major League Baseball. As part of this deal, it is responsible for providing streaming services to MLB teams and Time Warner's HBO. It will work with Disney to launch a multi-sports event streaming subscription service branded by ESPN, which charges consumers directly.

Following the sky-high acquisition of BAMTech, there are new rumors that Disney has targeted SFX Entertainment, the bankrupt dance music promoter, and Disney has entered the electronic music field?

Disney is a company with a complete entertainment industry chain. Its industry chain is centered on IP and its business is divided into five major segments: television, movies, theme parks and resorts, derivatives and games (however, in mid-2015, due to the mediocre performance of derivatives and games businesses, Disney merged the two into the same division). In recent years, Disney's main income has come from three divisions: film, theme park and television.

In Disney's third-quarter earnings report released in August this year, its revenue reached US$14.28 billion, an increase of 9% compared with the same period last year. Although it met Wall Street's expectations, the market was still not satisfied with Disney's performance. After the earnings report was released, Disney's share price fell 1.75%.

Since the beginning of this year, only Disney's film business has performed well."Fantasy Forest","Captain America 3" and "Finding Nemo 2" have contributed to the film business, increasing the business by 62% year-on-year, with revenue reaching US$766 million; The theme park and resort business grew by 6% year-on-year, with revenue reaching US$4.38 billion; while its cable TV business saw profit growth of only 1% in the third quarter, with revenue reaching US$2.09 billion.

Looking at the figures above, although Disney films are growing rapidly, their actual revenue is far less than that of the theme park and resort business, and the cable TV business has always been the reason why Disney is not favored. Almost all investors believe that in the new media era, companies like YouTube and Netflix will eventually replace cable TV. Although Disney announced this year that it would buy a 33% stake in BAMTech for $1 billion, hoping to change the status quo through broadcast of sports games, this behavior failed to prevent the stock price from falling.

From this point of view, it is not difficult to understand that Disney wants to enter the field of electronic music.

First of all, Disney is not short of money, and its revenue is enough to hold large-scale events; second, its own business development prospects are not very optimistic and needs fresh blood to supplement revenue. So, if we put multiple large-scale music events under SFX into our own theme park, what effect will it have? Can we create an IP focused on EDM in the future? These are all brain holes that are not difficult to achieve. Coupled with the fact that EDM is a favorite element for young people, it is not difficult for Disney, which has been doing youth culture, to take over.

The competition between "overseas tigers" and "local wolves" is

"a good tiger cannot withstand a pack of wolves." Which is stronger and which is weaker?

Regarding the competition for theme parks, Wang Jianlin made the remarks of "making Disney unprofitable for 20 years." In his view, the lack of indoor projects, reduced IP appeal and high costs are the three major problems currently facing Disney. To this end, Wanda has built indoor park projects in Nanchang and Hefei.

Judging from the Wanda City Theme Park project, Wanda has no problems in hardware investment and construction, but where the IP theme story of Wanda Amusement Park comes from is a question.

Of course, Wanda is also actively developing original IP in conjunction with local characteristic culture. Nanchang Wanda Paradise's six major theme areas, including Yunxiao Xiange and Colorful Porcelain Capital, reflect Tang and Song culture and porcelain culture, while Hefei Wanda Paradise's ancient charm of Huizhou, Themes such as the Battle of the Fei River display emblem culture.

But in terms of IP appeal, Disney is actually stronger than Wanda. In the final analysis, Disney is a content production company, while Wanda is essentially a real estate company. Disney not only owns classic IPs such as Donald Duck, Mickey Mouse, and the Lion King, but also continues to produce new IPs such as Frozen and White. This strong content production capability is temporarily unavailable to Wanda, which not only leads to the lack of attractiveness of Wanda The park also limits Wanda's income in IP derivatives. So Wanda still has a long way to go in terms of IP.

However, unlike Disney's independent theme park model, Wanda Park is only an integral part of the Wanda City project. In this large-scale commercial complex that includes theme parks, commercial streets, and Wanda Maowai hotels, as the number of surrounding residents continues to increase, even if there is no park, more than 100 brands settled in the commercial street and Wanda Maowai will still show commercial value, which has also made the competition between Disney and Wanda turn into a confrontation between one park and multiple "cities".

In terms of film industry, Wanda has already bought almost everything. After acquiring AMC, the second largest theater chain in the United States, in 2012, and completing the acquisition of Odeon & UCI, Europe's largest theater chain, and Carmike Cinemas, the fourth largest theater chain in the United States, Wanda Group will control 15% of the global box office. In January this year, Wanda spent another US$3.5 billion to acquire a controlling stake in Legendary Pictures, becoming the first China company to own a major Hollywood film company.

However, Disney relied on Mickey Mouse, the Avengers, the Jedi Knights, etc. to build its world-class influence rather than one movie theater after another.

If the rumors come true, Netflix will have exclusive rights to broadcast Disney content, including all content on Disney Channel and Disney XD, which will allow it to effectively resist the content competition brought about by the merger of AT&T and Time Warner. Disney will also use Netflix to build a consumer-facing content platform to provide a breakthrough for the development of the cable TV business. The combination of the two will undoubtedly become an unshakable existence in the film and television industry. For other competitors in the film and television industry, they will face a scary and difficult prospect.

Editor: yvette