Why Disney Is Trying to Become Netflix (and Vice Versa)

Disney’s notion of a smaller (and sweller) world includes Netflix having a significantly tinier slice of the streaming pie, and if that analogy seems hellishly awkward, consider how hard it is to write a grounded article about corporations fighting over make-believe tubes, and be thankful I haven’t used phrases like “cutting edge,” “best of brand,” or “innovate their way to success.” By that light, “streaming pie” is a boon of word-magic.

WHAT DISNEY WANTS, WHAT DISNEY NEEDS

According to Buzzfeed:

On Tuesday afternoon, The Walt Disney Company announced that it would be launching a video-streaming platform for its films in 2019, consequently ending its agreement with Netflix. The new service will be the exclusive home in the US for subscription-video-on-demand viewing of new live-action and animated movies from Disney and Pixar, beginning in 2019. This includes the Frozen sequel and the live-action Lion King, among others. Disney will also create original content exclusively for the service, which will include both TV shows and movies.

Since Disney began to hock straight-to-video movies, they have been angling for a platform like Netflix—but one that’s theirs, and theirs alone. The quick-morphing nature of entertainment and commerce have made this moment possible, where Disney could dream of becoming Very Internet and nobody could raise an eyebrow. Hence their feud with Netflix. On the skin of affairs, it seems an odd choice. For the outsider, it’s strange to see them fight: giant megafauna campaigning for the abolition of the other. And for the love of the consumer.

Very humbling—and a little weird—to watch vast companies fight as if they were beer brands dueling over who will be drunk by the most indifferent teens. Of course, they brawl to make money, but in a human sense, their calculations look weirdly like pleas for love, a pair of newly-divorced parents squabbling about their child’s affections in family court. Why are they so cunning for our adoration? Don’t they, I don’t know, own Florida and the Internet? Disney and Netflix: two fairy tales arm-wrestling for the same princess.

No wonder they spend so much time attending to the customer. I can’t speak for Disney but Netflix’s deep awareness into the Story of Jason is uncanny. Netflix wants you to love them. Why else would they be suggesting suspiciously appropriate shows for me to watch: Hey Rhode, remember the anime you watched, well here’s twenty along that line. Oh, do you like comfy dog stories ripped from the tales of the Children’s Crusade? Enjoy this Muppet soap opera with just that theme. While you’re ironing—sleeping—staring away from the glowing screen, we’re suggesting this fun movie we just made for reasons, it’s called the Jason Rhode Watch This Now Movie. Wow, Netflix, how deep into my medical records have you read, and do you watch me when I sleep? That’s cool either way.

WHAT NETFLIX WANTS

This grows double-puzzling if you research Disney and Netflix’s history together. Buzzfeed again:

Back in 2016, Netflix and Disney paired up, with the former gaining the exclusive streaming rights to Disney content, which included Disney films, Star Wars, and Pixar titles. A Netflix spokesperson told BuzzFeed News that “US Netflix members will have access to Disney films on the service through the end of 2019, including all new films that are shown theatrically through the end of 2018. We continue to do business with the Walt Disney Company globally on many fronts, including our ongoing relationship with Marvel TV.”

So, what is Netflix’s part? Where do they go from here? Interesting question. According to Stephen Follows,

For the past decade, DVD revenue has been shrinking rather quickly, due to piracy and changing consumer viewing habits. The industry is hoping that the new kid on the block, Video On Demand (VOD), can fill this shortfall. In 2014, I surveyed 1,235 film business professionals and found that 61% of them expect that within the next four years VOD revenue will be equal to the amount DVD generated at its peak. We’re still a way off that goal, but there’s no doubt that VOD income is becoming an increasingly important part of the film recoupment chain. In 2013, VOD provided 7.9% of all income generated by films in the UK, up from just 2.7% in 2008. Compare that with DVD stats (39% in 2008 and 23% in 2013) and the trend is clear.

Recode pegs Netflix as having 94 million streamers; 44 million “international streaming subscribers,” who are catching up to Netflix’s 49 million domestic subscribers. Those totals include 1.42 million net streaming additions in the U.S this quarter and 3.53 million internationally, where Netflix subscriptions are growing more quickly.”

Netflix is at the event horizon of real, culture-moving influence. As a wise man once said, every business becomes sexy at the appropriate scale. Piracy, after all, is just mugging but with scurvy. Farming is the grotesquely swollen limb of gardening, and most detective work is weaponized stalking. Disney reaching out to get its begloved hands on the miracle of streaming is not so different from you and me banding together to create a two-person drinking club that only allows cool people in. Kind of like the episode of Always Sunny where Mac and Dennis put together the weird house party with the bicep-shaped invites.

But Disney isn’t who we should be watching. Disney is an old company engaged in a typical action—expansion. Lots of studios have tried to buy distribution. Netflix is the contender with dynamic entry: distribution buying into content. They’re trying something new. Netflix just bought Millarworld, the fictional universe run and owned by Mark Millar, the comics writer. There’s rich irony bubbling from the deep ground here: Millar is the original can’t-draft-an-ending writer, and here Netflix has delivered an ideal ending. Buying his company whole-barrel (lock and stock included) means that Netflix has a set of small, gamey horses in their stable. As The Verge notes, writing about the recent purchase:

Disney’s deal has no doubt been in the works for months, but the timing seemed particularly pointed — especially since Disney’s press release touting its streaming service plans gave the Netflix split its own breakout paragraph. Netflix’s ambitions clearly go far beyond creating a streaming service, but both the Millarworld acquisition and the Disney reaction point to a changing media landscape. It’s one where Disney and Netflix companies are no longer collaborators or partners, but competitors, both racing for the same strategic vision.

It’s not the same vision at all, though. The House of Netflix has many mansions, and this is one more. What does Netflix want? Simple, simple: Netflix is not content with delivering content. They don’t want to make money helping Disney. They want to be Disney. Our friends in the streaming business have outsize appetites, and mean to spin the tales themselves. Why be a publisher when you can be the artist as well?

That’s the nub of it. And why not? Netflix has been four or five different companies in its long march to the present point. They were the quirky disc-by-mail company, and they flourished. It suited them, for a while, in the way all fashions suit after the first wear. And then the pipes of the Internet widened into high-key thickness, and so Netflix began streaming. Every month, their dominance grows. And so does their revenue. So why not try for Queen Bee status?

WHAT DO YOU MEAN THERE AIN’T NO QUANTITY CLAUSE?

To return to the issue of scale. Delivering and producing a movie is relatively easy. Size complicates. Always does. To deliver many films—films of a reputable size, with reputable buzz, according to a regular schedule, maintaining a reliable profit—is a thornier game.

Anybody who trains with weights—or “lifts,” to use the purer term—knows that there’s qualitatively no difference in heavy and lighter weights. It’s a matter of quantity. But as a wise man once said, quantity has a quality all its own. Netflix aims for content, but growing up and growing large is a whole other league of trouble. When you hoist hundreds of pounds above your head, the consequences for injury and damage are so much greater, movement takes longer, and posture is more important. And so it is with companies.

Why do you think Disney has been so careful not to get into streaming? Why haven’t they lined America with their cinematic plumbing? They tried, in a way, when they bought ABC. But being both a content and a delivery company is a curious labyrinth, even for an old, wise company like the House of Mouse. Being online means being very watchful. You don’t have to spend a lot of money to be Netflix (or Netflix’s replacement), you just have to be very precise. A diving falcon, gifted with the power of flight by way of hollow bones, hits only with gravity’s aid, but strikes true, at the back of the neck. Disney must do the same. They will try to do the same.

Onlookers imagine that Netflix and Disney are as peerless as the stars, and unchangeable; they set the course, and the rest of us must follow. In reality, they are as subject to the whims of the public and the market as the guy with a street cart.

Like Germany and Russia, Netflix and Disney tend to have designs on the other. The Walt Disney Corporation aims to stream, and our friends at Netflix are architecting up their own programming. In the world of entertainment, vertical integration—owning every step in the process—is a real possibility. But the nature of expansion raises real questions about what entertainment companies do, and what they should do. We are moving closer to a world in which content and delivery are the same. These two companies—both so eager to own two steps of the assembly line—suggest what is coming.

There was a time when Hollywood studios owned the motion-picture house of America; in fact, they had a monopoly on the joints. That fact shaped, for better or worse, the nature of movies during the early part of the Twentieth Century. The courts smashed that monopoly, and the whole abundance of postwar filmdom bucket-spilled out from that single stroke. And here we are, in a new field of play.

Combining the development and delivery of moving pictures will have a similar effect in the Twenty-First. The audience stays the same. The material remains roughly unchanged: captured images of a world. But behind the preservation of motion are continual motions of preservation: and they are far more interesting than anything that was ever seen on the screen, large or small.