It’s one of the biggest media shake-ups in recent history. The Walt Disney Company is in the process of buying up the entertainment businesses of Rupert Murdoch’s 21st Century Fox in a landmark $52.4bn deal. If it’s approved, it’ll be a union of Hollywood’s heavyweights. But the wider story is about how people consume entertainment content in the digital age and what this means for the corporate landscape.
“In the media world this is absolutely huge, but in the tech world, the combined entity is still far off the likes of Facebook, Google and Amazon, and I think that’s actually the point. Disney and Fox are realising that with the growth that you’re seeing within the tech versus media companies, the only chance they’ve got is by being a combined entity,” says Mark Mulligan, managing director of Midia Research. Mulligan thinks the change is necessary because “all of these companies [Google, Facebook, Amazon] are going to be going right at the home turf of Disney and Fox … What we’re in at the moment is a battle between distribution and content.
The saying always used to be that ‘content is king’ but now we’re seeing the distribution, the big technology companies – that’s where the power resides. So I think we need to look at the Disney-Fox deal within that context.” With so many streaming services around the world, Mulligan says there’s “a degree of maturity in online streaming – so there’s still vast amounts of growth in this market.” Interestingly, one of the things Netflix is great at is “migrating people away from mobile viewing to TV- centric viewing. The majority of people who sign up for Netflix on mobile will after a number of months mainly be watching through a TV set.
So, there’s a real recognition from the streaming companies of the need to get people away from the less reliable mobile networks into a home-wifi.” “But there’s going to be a much bigger challenge at the moment which is looking like we’re going to have new regulations on net neutrality in the US”, says Mulligan. “What that essentially means is that telephone companies that provide the internet access are going to be able to decide which services they want to perform well and which not … so it might be that a telephone company in the US has launched its own video service and it decides anybody who’s watching Netflix is going to get a small amount of connection – so however good your broadband connection is Netflix is always going to under perform. And that’s potentially one of the most worrying developments that’s facing streaming services at the moment.”
Get live updates from TripleHQ directly on your device, subscribe now.