Disney is gearing up to compete head-on with Netflix, especially once a content-sharing arrangement between the two companies expires this year. We take a look at what Disney's Q1'18 results mean for the company's new direct-to-consumer content strategy.
- Disney shows how much the direct-to-consumer model is disrupting traditional content delivery. Disney made 8 of the 12 top-grossing movies in the last 10 years but consumer spending on content released digitally beat movie ticket sales by more than $7B in 2017. Netflix and Amazon, which leverage digital distribution models, offer an ad-free consumer experience, and now produce content, are becoming a major threat to Disney.
- Moving forward, Disney is restructuring to become a direct-to-consumer company, namely to counter Netflix. Disney is in a fight with Comcast to acquire key assets of 21st Century Fox in an effort to strengthen its content war chest. In March, Disney also announced a major organizational restructure, consolidating its direct-to-consumer, technology, and international operations in one division to better keep up with the shift to digital content streaming.
- Disney’s betting the farm on its own streaming platform. Set to launch in 2019, the success of the company’s direct-to-consumer distribution platform will determine if Disney is able to challenge Netflix’s dominance in the digital home entertainment space.