How Has Disney's Acquisition of 21st Century Fox Affected Its Position in the Streaming Market?

It hasn’t had any affect… YET! But then again, that wasn’t the reason for the acquisition in the first place.

Why the Acquisition?

The primary reason for Disney's acquisition of 21st Century Fox was to control the Intellectual Property (IP) that Fox owned the rights to. Many people focus on the Marvel properties like X-Men, Deadpool, and Fantastic Four, as these are all part of the Marvel Universe that has made Disney so much money recently. However, the acquisition comes with a vast library of other properties, including Alien, Avatar, Die Hard, Planet of the Apes, and the entire Fox Film Library, which includes some TV shows. Additionally, Disney secured a greater stake in Hulu, the video streaming service owned by Fox among others.

The True Impact: Content Ownership and the Streaming Wars

While the acquisition of Fox did not immediately change Disney's position in the streaming market, it set the stage for a significant shift. The Streaming Wars is essentially a race to own content. The more content you have and the more versatile it is, the better your position will be in retaining subscribers.

If two services are priced the same, a customer will typically choose the one with the most and most versatile content, as it offers more choices. Therefore, content is king, a phrase popularized by Sumner Redstone and originally propagated by Bill Gates based on an article from 1974. The core message is that while the distribution method and technical proficiency matter, the content is what truly makes money.

The Evolution of the Media Industry

The evolution of the media industry has been driven by the shift from theater releases, to TV broadcasts, to on-demand streaming. Content owners like Disney now have the ability to sell their content to any distribution method that pays, cutting out middlemen like theater owners, TV stations, or cable systems. While this might initially seem like a win for content owners, it could also mean lower profits from these middlemen in the long run.

Future of the Streaming Market

The future of the streaming market is likely to see more acquisitions and mergers as media companies strive to own as much content as possible. Owning a vast library of content not only gives Disney a competitive edge by offering an extensive selection to subscribers but also provides the opportunity to create new content based on existing properties, further expanding their content arsenal.

The ultimate goal is to retain subscribers longer and expand content offerings. This could also lead to a shift in cable packages, potentially making them more flexible and cost-effective for consumers, with a move towards ala-carte options where customers can choose which channels to subscribe to.

So while the immediate impact of Disney's acquisition of 21st Century Fox might not be evident, the long-term implications on the streaming market are profound and likely to reshape the industry in the coming years.