Coming Soon: The Hollywood Giant And The Streaming King (NFLX)

Rumors are flying that Disney is planning on acquiring Netflix. Should competition be worried?

Netflix NFLX

It seems that Disney, under CEO Bob Iger’s leadership, is not done with their buying spree. In 2006, Walt Disney Co (NYSE:DIS) bought Pixar, a logical move considering they’ve been distributing Pixar films since 1995. Three years later in 2009, Disney bought Marvel Entertainment, now the home of the formidable Marvel Cinematic Universe. Another three years passed and in 2012, Disney made another remarkable move by buying Lucasfilm at a whopping $4 billion price tag.

It’s now been four years since that last big purchase and that’s probably why Disney seems to be making their next move. Maybe this will turn out to be Bob Iger’s final legacy before retiring as CEO by 2018.

According to a report by Tech Crunch, Disney’s next target purchase is no other than online streaming service Netflix, Inc. (NASDAQ:NFLX), which will be one strategic move to counter the potential imbalance that is probably brewing as a result of AT&T’s recent acquisition of Time Warner. Why? Netflix started out as a DVD rental service company, then gradually (and phenomenally) transformed into the king of subscription streaming services, with numerous hit shows and a devoted subscriber base. In spite of its large and loyal subscriber base, however, Netflix still lags in content, which is currently AT&T’s domain.

Being acquired by Disney will handily solve this problem. Instead of having to spend billions to come up with new content, Netflix will have the entire Disney library at their disposal. And everything that’s Disney’s — including shows on Disney Channel, Disney XD and Playhouse Disney, plus all the movies of Pixar, Marvel and Lucasfilms — will likely end up being exclusively available on Netflix.

On Disney’s end, acquiring Netflix (and possibly their CEO who is allegedly being eyed as a possible successor to Bob Iger), will enable them to win back the ESPN subscribers they have lost and are continuing to lose to online streaming services. And of course, all their shows will become available for viewing through Netflix, a much more exciting and seemingly more stable distribution platform than traditional cable TV. And, Netflix does have the biggest online media subscriber base. So a team-up between the biggest Hollywood studio and the current online media giant really makes perfect sense.

As it is, Netflix and Disney are already working together. There’s the string of original series from Marvel called “The Defenders“. And there’s also the TV deal (which took effect in September) giving Netflix subscribers the exclusive privilege to watch Disney releases (beginning with 2016 movies like Captain America: Civil War, Finding Dory, Doctor Strange, Zootopia, The Jungle Book, and Rogue One, Star Wars Episode VIII) during the first paid TV run.

If the deal pushes through, it’s certainly looking like a win-win situation for both companies. Netflix is about to face major competition from e-commerce giant Amazon (NASDAQ:AMZN) which has just confirmed that they will be focusing on their video content, even if it means they will hardly be making any revenues next year. At the same time, Disney is struggling with the trend that’s pulling people away from traditional platforms like cable and satellite TV. A Disney-Netflix team up might just be what Disney needs to distribute their content to a wider platform and what Netflix needs to keep their stronghold on their subscriber base. It’s an exciting prospect for viewers. But for competitors? Well, they’re probably hoping the rumors will just remain rumors.

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