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What’s interesting to me about this debate is that everyone seems to view it as a Disney is coming for Netflix story and not the other way around. But what prev

by dkrich 7y ago

What’s interesting to me about this debate is that everyone seems to view it as a Disney is coming for Netflix story and not the other way around. But what prevents Netflix from creating its own animation studio and producing its own blockbuster films and distributing them in theaters? What about licensing merchandise from its movies or television shows? It’s not all that clear to me that consumers will pay a monthly fee to stream movies they’ve already seen. In any case Netflix is so different than what Disney announced with Disney + that the case put forth in the article seems very simplistic and lazy.

mprev 7y ago
That sounds a bit like a "why does company X need 4,000 staff, I could build it in a weekend" type of question. Netflix has produced some really great TV (and quite a bit that's not so great), so they have track record here. But, whatever else you think of the company, Disney has decades of institutional experience in creating and monetising child-targeted animation. Growing the organisation that can do that isn't trivial. You can make great TV by outsourcing to production companies who then deliver so many hours of content. I suspect it's much more complex to build an organisation that turns IP into multiple streams of recurring revenue, in the way that Disney does.
scarface74 7y ago
Netflix is already getting in enough debt trying to keep up with competitors with the only income being subscription revenue. How much debt do you think they can take on? Besides “creating blockbusters” isn’t easy. See all of the other studios who are trying to create “shared universes”.
- dkrich 7y ago
  Because capital is cheap right now so you have lots of investors around the world with cash they are looking to get return on willing to lend it at relatively low rates. Netflix is able to borrow at low rates while ratcheting up the subscription price and adding millions of new paying customers every quarter which is how they are fueling hypergrowth. The idea that they should be cutting spending is completely antithetical to their long-term strategy. There is going to be a critical mass, I don't know where it is but I suspect its not far off, where enough subs around the world are paying a high enough rate while the need to produce new shows will be capped to keep people on the platform. Then you have a wheel where enormous amounts of cash is coming in every month and a fixed amount of content is being output. That's the path to profitability. Then if the sub base and price point continues to rise, they have enough cash to do other things like build theaters or produce blockbuster films. And that's not even counting if they come up with additional ways to generate revenue such as licensing.
  - scarface74 7y ago
    So if all it takes is money to make “Blockbuster films” then why isn’t anyone else doing it besides mostly Disney? Netflix has around 150 million subscribers and they charge less in developing countries than the US. Their entire quarterly profit was $291 million last quarter. To put that in perspective, that’s half the profit that Disney made on Avengers Endgame alone and that’s not including merchandizing and home video sells and rentals. Disney doesn’t need to get into debt for content and by the time Endgame reaches Disney+ it will have already made a larger profit probably than Netflix makes in an entire year.
    - dkrich 7y ago
      Netflix made over $4.5 billion in revenue last quarter and has been consistently growing it every year at insane rates. Disney? Not so much. A blockbuster film costs hundreds of millions of dollars to make. How many companies have the money and desire to play in that space? It's Disney's and a couple of other studio's wheelhouse. Netflix is quickly reaching the scale to compete there though and they have demonstrated the ability to hire away talent from all the major studios and quickly put out content that viewers demonstrably spend time watching. It seems like half the bull case for Disney + is Endgame. How many people are going to pull out their wallets to sign up for a subscription to stream a six-month old movie that they've probably already seen if they're that excited about it? Seems like a stretch to me.
      - scarface74 7y ago
        Netflix made over $4.5 billion in revenue last quarter and has been consistently growing it every year at insane rates. Disney? Not so much. Disney’s revenue was three times that and they just added Fox. Revenue means nothing without profit. Netflix’s total profit last quarter was less than that of either one of Disney’s last three Marvel movies. Netflix is quickly reaching the scale to compete there though and they have demonstrated the ability to hire away talent from all the major studios and quickly put out content that viewers demonstrably spend time watching. It’s not about the talent. Both Black Panther and Captain Marvel were made by unknown producers. Disney has multiple franchises that have been popular for decades. It seems like half the bull case for Disney + is Endgame. How many people are going to pull out their wallets to sign up for a subscription to stream a six-month old movie that they've probably already seen if they're that excited about it? Seems like a stretch to me. People are still buying Disney movies from decades ago. Kids will watch the same movie repeatedly. A lot of Disney movies are considered classics.

by dkrich 7y ago

mprev 7y ago

That sounds a bit like a "why does company X need 4,000 staff, I could build it in a weekend" type of question. Netflix has produced some really great TV (and quite a bit that's not so great), so they have track record here. But, whatever else you think of the company, Disney has decades of institutional experience in creating and monetising child-targeted animation. Growing the organisation that can do that isn't trivial. You can make great TV by outsourcing to production companies who then deliver so many hours of content. I suspect it's much more complex to build an organisation that turns IP into multiple streams of recurring revenue, in the way that Disney does.

scarface74 7y ago

Netflix is already getting in enough debt trying to keep up with competitors with the only income being subscription revenue. How much debt do you think they can take on? Besides “creating blockbusters” isn’t easy. See all of the other studios who are trying to create “shared universes”.

dkrich 7y ago
Because capital is cheap right now so you have lots of investors around the world with cash they are looking to get return on willing to lend it at relatively low rates. Netflix is able to borrow at low rates while ratcheting up the subscription price and adding millions of new paying customers every quarter which is how they are fueling hypergrowth. The idea that they should be cutting spending is completely antithetical to their long-term strategy. There is going to be a critical mass, I don't know where it is but I suspect its not far off, where enough subs around the world are paying a high enough rate while the need to produce new shows will be capped to keep people on the platform. Then you have a wheel where enormous amounts of cash is coming in every month and a fixed amount of content is being output. That's the path to profitability. Then if the sub base and price point continues to rise, they have enough cash to do other things like build theaters or produce blockbuster films. And that's not even counting if they come up with additional ways to generate revenue such as licensing.
- scarface74 7y ago
  So if all it takes is money to make “Blockbuster films” then why isn’t anyone else doing it besides mostly Disney? Netflix has around 150 million subscribers and they charge less in developing countries than the US. Their entire quarterly profit was $291 million last quarter. To put that in perspective, that’s half the profit that Disney made on Avengers Endgame alone and that’s not including merchandizing and home video sells and rentals. Disney doesn’t need to get into debt for content and by the time Endgame reaches Disney+ it will have already made a larger profit probably than Netflix makes in an entire year.
  - dkrich 7y ago
    Netflix made over $4.5 billion in revenue last quarter and has been consistently growing it every year at insane rates. Disney? Not so much. A blockbuster film costs hundreds of millions of dollars to make. How many companies have the money and desire to play in that space? It's Disney's and a couple of other studio's wheelhouse. Netflix is quickly reaching the scale to compete there though and they have demonstrated the ability to hire away talent from all the major studios and quickly put out content that viewers demonstrably spend time watching. It seems like half the bull case for Disney + is Endgame. How many people are going to pull out their wallets to sign up for a subscription to stream a six-month old movie that they've probably already seen if they're that excited about it? Seems like a stretch to me.
    - scarface74 7y ago
      Netflix made over $4.5 billion in revenue last quarter and has been consistently growing it every year at insane rates. Disney? Not so much. Disney’s revenue was three times that and they just added Fox. Revenue means nothing without profit. Netflix’s total profit last quarter was less than that of either one of Disney’s last three Marvel movies. Netflix is quickly reaching the scale to compete there though and they have demonstrated the ability to hire away talent from all the major studios and quickly put out content that viewers demonstrably spend time watching. It’s not about the talent. Both Black Panther and Captain Marvel were made by unknown producers. Disney has multiple franchises that have been popular for decades. It seems like half the bull case for Disney + is Endgame. How many people are going to pull out their wallets to sign up for a subscription to stream a six-month old movie that they've probably already seen if they're that excited about it? Seems like a stretch to me. People are still buying Disney movies from decades ago. Kids will watch the same movie repeatedly. A lot of Disney movies are considered classics.