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Is Disney a digital entertainment monopoly?

When we first heard of Disney acquiring 21st Century Fox (21CF) we rejoiced but were reminded that this move would put Disney, the entertainment powerhouse, in a new position: Years ahead of the competition.

However, before that, the company was eyeing Netflix, which is not a direct competitor but another company that can grow their business. Fortunately, Netflix refused to sell.

Reminiscent to Facebook; when it tried to buy Snapchat, Disney said: “If we can’t buy them, beat them.”

Disney started plans to create their own video-on-demand (VOD) service which it released details about: “While the official name has not yet been released, the service has been referred to as ‘Disneyflix,’ in a play on the VOD market leader Netflix,” Business Insider said. Yet, will companies like Netflix, StarzPlay, and other VOD platforms suffer?

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Mickey Mouse wants it all?

Disney is buying it all starting with 21CF. It currently owns Marvel Entertainment, Lucasfilm, ESPN, and ABC-News. This is where it has its foot in the entertainment industry:

1-    Marvel, Lucasfilm, 21CF together currently own 7 of the 10 highest grossing films of all time (net: $11.7 billion), according to the BoxOffice official website.

2-    ESPN claims to be the worldwide leader in sports entertainment.

So, Disney is seeing cash and planning growth while also acquiring it. However, Is DisneyFlix part of a play against another VOD service to acquire it all?

Netflix is not struggling; it is growing.

Netflix ended Q2 with 130.1 million global subs, up 25% year over year, with 56 million in the U.S. and 72.8 million elsewhere, according to Variety and for the first time, Netflix generated more revenue outside the US: International revenue totaled $1.92 billion and U.S. revenue was $1.89 billion. Assets were reported by the company at $22.7 million compared to the previous year’s Q2 which stood at $16.5 million.

Regionally the impact might be minimal: STARZ PLAY is leading the way with 26% of subscriber market share in the region compared to Netflix at 16% and ICFLIX at 11%.

STARZ PLAY is also number one in revenues, in a regional industry worth around $8 million. It garnered a 28% ($2 million) share, compared to 21% or $1.3 million for Netflix, according to Arab News’s report, and our calculations of $10/subscriber for Netflix and $9/subscriber for STARZ PLAY, in 2017.

Taking the streaming giants down might not be as easy as Disney thinks, but Business Insider reported that Disney could instead be aiming to co-exist with Netflix and other VOD platforms.

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Business strategies

Disneyflix will be priced lower than Netflix, meaning it could cost less than $10 a month. While Disney aims to compete with Netflix in terms of scaling its platform, it also recognizes that it's not a direct replacement for the dominant VOD.

CEO, Bob Iger said: “A lower price point makes sense because the service will have less content than Netflix.” Pricing Disneyflix under $10 a month could allow it to coexist with Netflix without taxing consumers' willingness to pay for entertainment.

Disneyflix will exclusively stream some of the most valuable, desirable content across the media landscape, with IP from across powerhouse brands Marvel, Lucasfilm, and Pixar.

Disney's US domestic box-office market share is 28%, followed by Universal at just 15%, according to Statista.

(Courtesy of Statista)

Details on who is going to be in charge were also released.

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A whole new world?

“Some details have emerged about Disney's forthcoming Disney-branded VOD service, which will likely launch in fall 2019, according to the New York Times profile of Ricky Strauss, who is heading creative production and marketing efforts for the streaming service,” said Business Insider.

(Courtesy of Business Insider Intelligence)

“Putting Strauss on the top job could drive massive uptake to Disney's VOD service right out the gate,” BI said.