For some time now, a lot of people have expressed concern over Disney's attempt to buy FOX.
Alright, I'm being too nice. People have been freaking out about it en masse, but it's been one of two extremes. Either you're really excited because now it means the studio with the division that controls the Marvel Cinematic Universe has the rights to add the X-Men and the Fantastic Four to it, or you're upset because Disney will now control 46.3% of the current studio market share, giving them a majority stake that is unrivaled by the other studios and likely means a ton of eliminated jobs for people who worked at either FOX or Disney when they were separate.
What is intriguing about both of those extremes is how much they are both missing the real point, albeit the first one more so than the second one. Let's address that one first.
To begin with, you have a very limited perception of the movie landscape if all you are worried about is whether or not the MCU can finally use the word "mutant" in its movies and can make a Fantastic Four movie that the general populous could actually enjoy. That means so little to Disney in the grand scheme of this deal that it's not even funny. Rest assured, The Mouse House didn't agree to pay $71.3 billion just to bring Marvel properties together, no matter how many billions you think they can make with a rebooted X-Men franchise that's connected to The Avengers. That doesn't mean you can't be excited at the prospect if you are an MCU fan, but if you are a fan of movies and media in general you owe it to yourself to get educated about what this deal does to the entire landscape of Hollywood.
That brings us to the second point about the market share. Yes, Disney now controls nearly half of the studio market share. The next closest studio in numbers is Universal, owned by Comcast, which has a 13.3% market share, which is 33% less than what Disney will now control. If you're a fan of going to the movie theaters, that's not a good thing for variety of content. You now have a nearly 50-50 chance that the movie you are going to see at the theater is a Disney product in some form, which honestly is a reality that most geeks have had to deal with for a few years now with both Marvel and Star Wars under the mouse's command.
The thing is, that market share is likely not going to matter in the next decade and it's all because of why Disney bought FOX in the first place:
That's a simplified answer, but let's break it down further. Over the past five years, streaming content over the Internet has grown from being a niche fad to a viable industry and Netflix has led that charge. Regardless of what you might read about in terms of money lost or gained, Netflix currently has a reported market cap of $170 billion and has more than 130 million subscribers, which was actually reported as just missing their projected goal of 132 million. By comparison, Disney's market cap is $159 billion, which is not only behind Netflix but also behind AT&T-Time Warner, now valued at $197 billion.
Netflix has been slaughtering everyone else in the streaming game to the point that others are playing major catch up to reach them, which is a big part of why AT&T wanted Time Warner in the first place to get into the streaming game with content creators like WB, HBO and Turner, all of which they now own. Sure enough, it's been indicated by AT&T's chiefs that they want to expand HBO's streaming capabilities and make it a true rival to Netflix in terms of content creation, because they know that the media and entertainment industry is headed straight for the Internet.
Disney knows this as well, which is why they wanted FOX to build up their own assets in a bid to compete with their own streaming app that launches in 2019. It also gives them a 60% majority stake in Hulu, which despite a tiny market cap of $8.7 billion has been making inroads into streaming content itself. So while the Mouse House may now own a majority share of the Hollywood market, its concern is the streaming game and getting to a point where Netflix, Amazon and others are not lapping them like they have been and currently are. As VOD and OTT content and apps continue to proliferate, and as more and more creators like Ava Duvernay, Shonda Rhimes and Ryan Murphy migrate to Netflix, it's becoming even more clear that movies and television as an industry is shifting toward the online platform and leaving the traditional studio system in the dust.
So how much of a monopoly is Disney really going to "control" in the next decade? Owning that 46.3% market share is not going to help them chase Netflix or AT&T-Time Warner, or Comcast for that matter, a company that already owns Universal and is making a bid for majority ownership of Sky, a British media and telecommunications company with a $30 billion market share that FOX owned 39% of. It's been reported that Disney chief Bob Iger really wants it, but what good will it do him if Comcast owns the 61% majority of it as they are intending to? Add this to the fact that AT&T and Comcast are already Internet Service Providers with streaming capabilities ready to roll while Netflix is still racing ahead of everyone with their privately owned platform, and you can begin to see why Disney's move really isn't the monopoly people are worried that it is. When the other major studios with smaller market caps like Sony and Paramount are bought by ISP's, which the AT&T-Time Warner deal now legally allows them to do, how long do you think it's going to be before that Hollywood market share becomes a useless lemon in favor of the streaming market share, which Disney at this point in time has little to no stake in?
By the way, if you are concerned about creator freedom in all of this, again look at the streaming situation. There's a reason these major names and creatives are going to Netflix and are producing content for Amazon Studios and Hulu and the like. It's because they are being given a freedom over their domain that Hollywood and Disney have been constricting. Content creation rules over the air and in movie theaters is one thing, but the structure of paywalls, subscriptions and the general capacity of streaming to vastly different audiences all at the same time is something else. It's an unparalleled freedom that the traditional structure couldn't even begin to build because of the whole regulatory mindset that has been in place for years.
Bear in mind, this doesn't mean that you shouldn't be concerned about monopolies. There is very much that concern now regarding ISP's owning content creators. If you are an AT&T customer, the service you pay for now controls DC Comics and Game of Thrones as examples. How comfortable are you with your Internet provider also controlling the content you like to watch? Same goes with Comcast owning Jurassic Park and This Is Us, which they do. What happens if either of these companies buy Sony or Paramount in the next few years, which they are now far more likely to do in the wake of this new streaming ISP controlled structure that is evolving? Then we will all be waiting for either Disney to become an ISP or for it to more likely be bought by one. We will almost certainly be looking at the death of the studio system as we know it, but at the birth of a streaming studio system, one that won't be controlled by Disney in the slightest, but by the companies who sell us Internet access in the first place.
So when expressing an opinion one way or another about this Disney-FOX deal, make sure you have all the information about the situation and look at the whole landscape of why this is happening and what it truly means for everyone. Otherwise, you might miss major details that will certainly present themselves in the very near future as the industry continues to evolve from the movie theater and the airwaves to the Internet connection.