Direct to consumer: Traditional media brands like Disney are racing to catch Netflix before it is too late.
Some analysts estimate that Disney would need 40M monthly subscribers paying $6/month just to break even with its upcoming streaming service.
Quote from Jessica Reif Cohen — Media Analyst @ Bank of America Merrill Lynch:
“All of the media companies will have to become more consumer-oriented… Five years ago, none of us thought people would watch as much as they do on their phones. Content consumption is going mobile, nonlinear and on-demand.
The media universe has never evolved this quickly — we haven’t seen this kind of change in the last 40 to 50 years. This has been the big concern in the market about media for the past three years.”
Valuations of major media players:
1) Apple — $1T
2) Amazon — $920B
3) Alphabet (Google) — $844B
4) Facebook — $504B
5) Disney — $167B
6) Comcast — $163B
7) Netflix — $140B
8) 21st Century Fox — $84B
9) CBS -$20B
10) Viacom — $12B
Quote from Ted Sarandos- Chief Content Officer @ Netflix:
“Pay television didn’t have a distribution problem — it had a packaging problem and a content problem. We saw that a lot of [cable customers] were paying for sports they didn’t want and channels they didn’t watch. There’s got to be much more equilibrium between consumer demand and pricing. Through the growth of all these direct-to-consumer services, television will become better and better.”
Netflix currently pays Disney ≈ $300M per year to license their movies. That revenue will go away next year when Disney pulls its library from the streaming service.
That deal would be worth far more if it were extended today.
More #2: OTT Is More Than Just An Acronym