Streaming wars: How Disney wants to take your cash

Netflix once had the field to itself. Now Disney and other Hollywood behemoths are closing in – and they’re here to take your money

“In Hollywood today, the simple truth is that there are two types of movie studio: Disney, and those that wish they were Disney.” So writes Ben Fritz, entertainment reporter for The Wall Street Journal, in his new book The Big Picture.

The figures in Ireland alone go some way to justifying Fritz’s claim. The studio currently has the five highest grossing films at the domestic box office for 2019: Avengers: Endgame, Captain Marvel, Toy Story 4, Aladdin and Dumbo. Endgame came tantalisingly close to grabbing the record for highest-grossing film of all time. The incoming pseudo live-action remake of The Lion King cannot fail to make a fortune.

This happens as Disney moves ahead with the most audacious merger in the history of the motion-picture business. The average cinemagoer could be forgiven for not much caring that, as of March 20th, the Walt Disney Company owns mass media corporation 21st Century Fox. Does it matter to the punter that, already in control of Marvel, Pixar and Star Wars, Disney now also has a hold on the Avatar franchise? The cineaste will note that, now Disney has engulfed venerable 20th Century Fox, the number of “major” studios has been reduced from six to five. That’s interesting. But Spider-Man is still Spider-Man.

The merger is, however, connected to a revolution (or possibly counter-revolution) that will alter how we all consume moving pictures. Disney has shown that is it is still possible – despite the current slow summer at the box office – to make money from theatrical distribution. But the gold rush is elsewhere. Bob Iger, CEO of The Walt Disney Corporation, has been frank about his company’s ambitions. This is less about access to Fox’s production facilities than it is about acquiring “content” for the incoming streaming channel Disney+.

“We would not have done that transaction had we not decided to go in this direction,” Iger said, “Because – if we hadn’t, we would have been looking at that business and through a traditional lens: ‘Oh, we’re buying TV channels. We’re buying more movie-making capability.” In a few months, all 30 seasons of The Simpsons, Fox’s ancient cash cow, will be available to stream on Disney+. Fox’s huge catalogue of movies – including the first Star Wars film – are also now in the Disney fold.

A small number of very big films now make all the money that matters
 

Competitors are making similar plans. The streaming market, hitherto dominated by Netflix, will soon change beyond recognition. One of the few benign dictums of capitalism – the notion that competition makes stuff cheaper – is about to be turned on its head as families prioritise whether to stay with Stranger Things or fork out for Star Wars. This is not just, as the Americans say, an “inside baseball” story. It will affect virtually everyone with an internet connection.

Many people are still baffled that the merger was allowed to take place. As long ago as 1948, in United States v Paramount Pictures, the Supreme Court ruled that it broke anti-trust laws for studios to distribute films exclusively through their own cinemas. The break-up of those companies’ exhibition wings ended the original incarnation of the studio system. Any comparison between the two cases makes the head spin. In 1948, the court was largely concerned with vertical integration – where a company’s supply chain is owned by that company – but, in the current case, it seems as if increasing vertical integration is being used as an excuse to allow the merger.

Variety explained the situation back in 2017: “Disney will emphasise the fact that its purchase of Fox’s content assets will enable it to build a rival to Netflix as the future heads toward online streaming. In other words, it is enhancing the competitive landscape, not shrinking it.” You’ll need the upcoming Warner Brothers channel to hear Judy Garland say “We’re not in Kansas, anymore” in The Wizard of Oz. The world does, indeed, seem topsy-turvy.

Meanwhile, Disney will continue its unprecedented dominance of the theatrical marketplace. The company has been a player since the inter-war years, but the irresistible blitzkrieg was not launched until some years into the current century.

Cinema market

The box office top 10 for 2000 reflects a cinema market only marginally less remote than that of 1945. It scarcely seems possible, but there is only one sequel in the list (though Mission Impossible II is, to be fair, at number one). Cast Away, an Oscar-nominated drama, is at number three. Two live-action comedies – What Women Want and Meet the Parents – make it into the golden 10. Only one film produced by Disney, the ill-remembered Dinosaur, makes it into the chart. The top 10 for 2018 is a mass of superheroes, sequels and remakes. There are no live-action comedies. The closest thing to a live-action drama is Bohemian Rhapsody. In 2000, Gladiator, the eventual best picture winner at the Oscars, was the second-highest-grossing film. The 2018 victor, Green Book, was regarded as a hit, but it still came in only at number 31.

There are more streaming services on the horizon, and it’s going to cost you. Photograph: iStock
There are more streaming services on the horizon, and it’s going to cost you. Photograph: iStock

Disney deserves much credit. As online sources of entertainment shrink the theatrical industry, the company has continued to draw geezers from a well other prospectors thought to be dry. A small number of very big films now make all the money that matters.

In The Big Picture, Ben Fritz notes that Disney’s strategy means: “abandoning any type of film that costs less than $100 million, is based on an original idea, or appeals to any group smaller than all the moviegoers around the globe”.

Fritz doesn’t hold back when he sets to explaining all the things the company doesn’t do. “Disney doesn’t make dramas for adults. It doesn’t make thrillers. It doesn’t make romantic comedies. It doesn’t make bawdy comedies.” The list goes on before concluding that: “Disney has, in short, taken a huge chunk of risk out of a risky business.

RTÉ had the country largely to itself for 30 years
 

In the aftermath of the merger, Disney confirmed that it was progressing with its campaign of aggressive risk aversion. Upcoming Fox films such as Mouse Guard, News of the World and On the Come Up were cancelled. The first of three Avatar sequels was kicked back a year from Christmas 2020 to Christmas 2021. (The upside of Avengers: Endgame not quite breaking the all-time box-office record is that Disney can now announce “the long-awaited sequel to the highest-grossing film in history”.)

How ruthless will Disney allow itself to be? The company is to shut down Fox 2000 Pictures, the sub-studio that delivered hits such as Hidden Figures, Walk the Line and The Devil Wears Prada, but it does seem to be hanging on to Fox Searchlight. That company exists to make the sort of films that Ben Fritz claims Disney has stopped making.

Birdman: bagged best picture Oscar for Fox Searchlight

It also exists to win Oscars. Movie trivia buffs rejoice in noting that Walt Disney Studios, one of Hollywood’s great behemoths, has never won the Academy Award for best picture. In the millennial years, as owners of Harvey Weinstein’s Miramax Pictures, Disney were often proud parents during awards season, but the core studio’s performance sits in stark contrast to that of Fox Searchlight.

Formed as recently as 1994, Searchlight has won best picture on four occasions: Slumdog Millionaire, 12 Years a Slave, Birdman, and The Shape of Water have all taken the gong. Searchlight’s The Favourite came close earlier this year. 20th Century Fox’s Le Mans ’66 (confusingly titled Ford v Ferrari in the US) looks likely to be a player in the upcoming awards season. It remains to be seen if gong fever is enough to keep Disney in the business of movies for grown-ups.

Matt Smith as Philip and Claire Foy as Elizabeth in The Crown
A Netflix original: Matt Smith as Philip and Claire Foy as Elizabeth in The Crown

All this looks like a distraction from the business that matters most. For a few brief years, audiences enjoyed a golden age of streaming. Most users were happy forking out a tenner a month for all that Netflix could offer. Its selection of older movies was dismal. But you got a wide array of series from many broadcasters and, as the years progressed, Netflix originals such as House of Cards, Orange is the New Black and The Crown. Netflix was synonymous with (legal) streaming in a way that RTÉ was, for several decades, synonymous with broadcast television in large portions of Ireland.

A relatively small percentage of viewers also paid for Amazon, but Netflix was IBM mainframes, Heinz ketchup, Tampax sanitary products. Nobody came close. Nobody referred to an evening of smooching and streaming as “Hulu and chill”.

‘Major opportunity’

Business moves quickly now. RTÉ had the country largely to itself for 30 years. Netflix had barely established the model before its competitors wised up and began grabbing back their content. Last month it was announced that Netflix had failed to hold on to the rights for the US version of The Office, the service’s most watched show, beyond January of 2021. NBC, the series’ original broadcaster, plans to make the show available on the upcoming NBCUniversal streaming platform. The Hollywood Reporter claimed that it would cost NBCUniversal $500 million to pull the show from Netflix.

Apple is moving into the market. No less a deity than Oprah Winfrey was at the company’s headquarters in California to big up the new service earlier this year. You may have read about it on your iPhone: “They’re in a billion pockets, folks,” Winfrey said. “The whole world’s got them in its hand, and that represents a major opportunity.” Winfrey is to deliver documentaries and content from her indestructible book club. Steven Spielberg, Reese Witherspoon, Jennifer Aniston, Steve Carrell and (ahem) Big Bird were also there to confirm their involvement.

That gravy train has left the station
 

Friends is consistently among the most watched shows on Netflix, but it seems inevitable that Warners will snatch back the comedy for its projected WarnerMedia service. That studio’s tasty back catalogue includes Lord of the Rings, Harry Potter, all the DC films and Casablanca (we can dream that this still matters). Reports suggest that JJ Abrams has struck a $500 million deal to move his Bad Robot production company to WarnerMedia.

Pity the poor BBC who, without knowing it, pioneered the streaming revolution with the iPlayer. The corporation is set to amalgamate its archive with arch-rivals ITV in the patriotically named BritBox. It’s as if Dr Who and The Master took on the Daleks together.

There are plenty more competitors where that came from, but none so potentially fearsome as Disney+, which launches in November. The studio began cancelling its Marvel series for Netflix some time ago; Jessica Jones, Luke Cage and Daredevil already look like relics from a transitional age. New shows will link up with current Marvel entertainments to create a terrifying meta-universe that stretches from multiplex to the phone in your pocket. “Direct-to-consumer distribution has actually become an even more compelling proposition in the six months since we announced the deal,” Bob Iger said of the Fox merger. “There has just been not only a tremendous amount of development in that space, but clearly the consumer is voting – loudly.”

That may well be true. But our hypothetical consumer would be happier if all this content were showing up on the service they already pay for. That gravy train has left the station. In the future, rather than slapping down for Netflix and maybe one other service, the average punter will have to budget between dozens of competing providers.

All this babble matters. It’s going to cost you.