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There are mergers and consolidations to come, that's for sure, but it would make no sense for Disney to do a deal with Netflix.

Netflix is a pure play. Disney+ is part of a somewhat integrated business: streaming, theatre, toys, theme parks, cruises each advertise and reinforce each other. Everything they do is a cross sell. And though I don't personally enjoy most of their output, I see it as generally very high quality.

During COVID things got out of whack, with streaming being a significant, high-growth source of revenue while in-person revenue streams languished.

The right way to think of Disney streaming is (ultimately) a low cost way to scoop up residual revenues. They put a film in theatres and can do hundreds of millions, and even billions in revenue. Then stick it on streaming (marginal cost for subscribers and Disney: essentially $0). Take it off streaming, sell disks. Put back on streaming. Repeat.

The thing Disney and Netflix have in common is high quality software and deployment, head and shoulders above anyone else. But that's about it.

That makes an assumption.

- That Netflix has a infrastructure competitive advantage. That probably used to be true with microservices, chaos monkey, and all that. But while a big streaming platform isn't something a couple engineers throw together in a weekend, it's a pretty well understood problem. It's content that attracts subscribers.

And that content doesn't really have economies of scale. Having twice as much good content probably costs about twice as much which means you ned to charge about twice as much which doesn't offer a compelling advantage over just having two separate subscriptions.

Netflix's infrastructure advantage was/is in Open Connect. They work with ISP's and ship servers that locally cache terabytes of content as close as possible to the customer to reduce bandwidth costs for themselves and ISP's. Nowadays with higher and cheaper bandwidth there are many CDN's that have similar arrangements with large and small ISP's that Netflix's advantage is not as significant anymore. But even today Netflix's streaming experience is noticeably superior, just not enough for it to be a selling point anymore.

In regards to content scaling, that seems right on the face of it. But, Netflix had been pushing the idea of "Amortization of Content" in that content once created has an extremely long lifecycle, and essentially a long tail. As people will always watch older content. And a lot of times people would miss it, and things start trending later on. However, quality of content matters. If you're spending money on poor quality content. People won't watch it once, let alone multiple times across time. I feel that's what Netflix had been doing lately. And lost their competitive edge, as competitors increased the quality of their shows.

People do watch at least certain types of older content. They watch movies from the earlier part of last century.

But I'm not sure how much money is in there, especially for a subscriber service--which mostly justifies licensing costs by retaining or gaining subscribers.

I'd also observe that Netflix has allowed their back disc catalog to deteriorate. Which suggests a fairly comprehensive back catalog doesn't necessarily pay the bills.

Yeah the author suggests as such..."it turns out, though, that Netflix gets and keeps customers with new shows that people talk about, while most of its old content is ignored", again lies the difficulty in churning out new hits with new IP.

> Disney is amazing at making content

Are they? They're certainly good at buying IP that people like, and now they own a big back-catalogue of beloved franchises. But the vast majority of content they pump out these days is mediocre at best. They own so much that if you want to go to a theatre to watch a movie, your pickings are essentially all owned by Disney. They generally make money but it's because they bought everything.

I can definitely think of more Netflix originals that I've enjoyed in recent years than offerings from Disney's zero-risk, safe, predictable gray goo.

So... they are amazing at making content. They can sell it and make a profit.

Also great partnerships with IPs and so on. I'm no disney fan, and prefer slow paced european numbers, but their numbers are very good.

The movies industry has had a lot of trouble in the past decade and they've still thrived.

They've "thrived" because of what I just said - Disney has a near monopoly on blockbuster movies that come through theatres, but that doesn't mean it's good content people want to watch, they just don't give anyone much of an option.

I don't think their model would work if they just dumped all their content on Netflix. If it's not working with Disney+, why would it work in another service that's the same thing with a different name? People have plenty of options of content to stream that aren't from Disney, so their status doesn't mean anything in that space.

Also it's not "great partnerships," it's monopolistic purchases that allowed them to buy their way to their current position. And even with the well-beloved IPs they acquired, they still manage to fumble things. Look how badly they messed up that Star Wars trilogy. They're not good at making content.

I think what you're describing could be a white-label Netflix. Essentially a different UI skin, branding and content library but served by Netflix's tech stack, etc.

Its probably more likely any consolidation would happen with the smaller players (NBC, CBS) doing this with Netflix rather than Disney.

I've wondered how it would work if Netflix implemented something like Amazon Prime Video Channels and let distributors offer content as additional/separate subscriptions in the Netflix UI.

Like, Netflix's UI has some annoyances, but it would be so much better if I could access all my streaming content in one central place instead of having to manage a dozen different shitty services, all with their own separate accounts, apps, watch lists, etc. and their own idiosyncratic quirks and buggy (or outright missing) features.

Funnily enough, Disney+ is built by BAMTech who is a spin-off of MLB Advanced Media (ref https://en.wikipedia.org/wiki/Disney_Streaming ).

It's also interesting to note that while Netflix may not yet have a white label arm, others do. Vimeo pivoted from trying to compete with YouTube to being a white label streaming service and there are several "powered by Vimeo" if you look under the hood. YouTube themselves offers some "gray label" services (Google is too proud of the brand to entirely wash it from such services).

Most interesting to this particular discussion is that Disney themselves have a white label platform at this point. Disney Streaming powers Disney+ and others at Disney, started as the pure white label platform from BAMTech (which Disney acquired), has merged in some of the platform used by Hulu as well (and Hulu had some white label deals beforehand, to my understanding) and is still the white label powering things like MLB and NHL streaming services (which both used to have small amounts of ownership in BAMTech, but now Disney is sole owner).

If Netflix were to build a white label platform today, they'd already have Disney as competition.

Well this is already sort of the case. But instead of Netflix it's Hulu. Hulu was the sort of agnostic platform that included live TV and needed to be able to VOD all the shows available on live TV networks. Now, you bundle Hulu + ESPN + Disney. Until every company wanted their own streaming service, Hulu was where you could find broad network content. And they even have commercials, so it worked great by classical TV metrics.

The issue is, Hulu created content is meh. Hulu's UI is meh. And Hulu doesn't aggregate ESPN+ and Disney+ in a single pane. And now everyone wants to own their own cut of the streaming service pie. So there was a push for this type of service that saw the incumbents rallying together against Netflix. For whatever reason that wasn't good enough for them, so the idea that now they will just partner with Netflix seems unlikely.

> And Hulu doesn't aggregate ESPN+ and Disney+ in a single pane.

My Hulu shows aggregated ESPN+ in the "Live TV" category (which does show up on the Home Hub as well). It's quite obvious to me because that and HBO (incidentally) are the only "Live TV" I pay for so all I see in the Live TV section at all are ESPN+ and HBO.

Disney+ aggregation isn't there in Hulu, but the opposite is definitely already happening: a bunch of Hulu shows are now aggregated in Disney+ for me. Though the border between "aggregated there" and "slowly moving there" is quite blurry as Disney does seem keen to move towards Disney+ as the final brand left standing and eventually killing the Hulu brand. This is already the case in most of the world (Star+ which was the Indian sub-continent Hulu equivalent that Disney also outright bought is a "hub" in Disney+ rather than the other way around, despite predating Disney+ by several years just like Hulu; incidentally Disney did integrate a Star+ hub into Hulu in the US if you were curious what some of that content looks like), so it does seem inevitable in the US eventually Hulu will be eaten by Disney+.

(The one weird twist to that being how protective Disney as a brand has been of their family friendly part of their brand image in the US and in their merger of Fox and Hulu they found it useful to treat the Hulu brand as "Disney After Dark" and avoid some of the "family friendly" issues in the first few months of Disney+ while they added parental controls and other family focused tools after the US launch date. Disney will get to unwind the concept that they need a "Disney After Dark" that their own PR created in the first place in order to eventually merge Hulu into that plus in Disney+.)

Thanks for the update on that. I went back and checked and you're correct ESPN+ is there for Live TV. I just also happen to pay for Hulu Live, so it gets a bit buried. But it is in fact there.

I then went and checked Disney+ and you're also correct. Some of the Hulu content is now on that app. But yeah, its almost like completely random content was moved over, so it seems like its just easier to go to Hulu for now. But it's been clear for a while that Hulu is dying slowly.

For a while it seemed like Hulu was the path to killing Netflix but that floundered out years ago. And now everyone has their own service, so it seems very unlikely its worth trying to rebuild off Hulu at all. We'll see how Disney deals with the more adult/dark content on their platform but that seems like a better problem to solve than having 3 different platforms for streaming stuff. I do wonder if they will care at all about live streaming though; it costs a lot of money and idk how good the margins are.

Yeah, my Hulu account dates back to an early Beta key from a friend then working at GE Appliances, and I've maintained an active subscription on my Hulu account through more years than my Netflix account, so there's an interesting sense of nostalgia/loss in assuming the Hulu brand will be dead soon and even if it manages to remain a zombie brand for a while (if for no other reason than the "After Dark" problem), the Disney era of Hulu which started just a few months back when Comcast sold their last shares of Hulu to Disney is already a different Hulu from the Hulu that once thought it could be a multi-provider aggregator platform to truly rival the cable companies. (Not that Disney killed that vision, Comcast did their part to kill that vision when they bought majority ownership from GE along with NBC Universal.)