August 9, 2017 / 5:10 PM / 3 months ago

Netflix losing Disney sounds like an HBO sequel

NEW YORK (Reuters Breakingviews) - Netflix losing Disney sounds like an HBO sequel. The Magic Kingdom is yanking “Cars” and more from the $75 billion streaming service. Time Warner’s pay-TV network also once grew so popular that Hollywood studios got scared and started rival options. HBO kept thriving and so will Netflix.

The Netflix logo is shown above their booth at Comic Con International in San Diego, California, U.S., July 21, 2017. REUTERS/Mike Blake

Walt Disney boss Bob Iger on Tuesday unveiled a new strategic plan aimed at the rapidly changing landscape of movie and TV consumption. The company will create its own direct-to-consumer streaming-video services. That means ditching Netflix starting with the 2019 theatrical releases of Pixar and other movies.

What remains unclear is whether the Marvel superhero and Lucasfilm “Star Wars” fare also will be taken away. It’s a tradeoff for Disney. The company gets paid about $300 million a year from Netflix for about 10 movies, analysts at Morgan Stanley estimate. Rupert Murdoch’s Twenty-First Century Fox and AMC Networks have been withholding some programming, too.

HBO encountered a similar backlash more than three decades ago. By 1983, it had grown to about 12 million subscribers on the back of live sporting events and movies. Fearing HBO’s encroaching power, studios including Paramount and Viacom launched Showtime and The Movie Channel as alternatives.

They hardly impeded HBO’s growth or the symbiotic relationship with Hollywood. Over the ensuing five years, the network attracted 7 million more customers, according to a contemporaneous report in the New York Times, while also striking a $500 million deal with Paramount. HBO now has nearly 85 million subscribers around the world, its own stand-alone digital service and last month received over 100 Emmy nominations for programs such as “Westworld.”

The Netflix playbook has been similar. It is spending some $6 billion this year to buy and create original shows such as “Stranger Things” and “The Crown.” It also just announced the first acquisition in its 20-year history, of comic-book publisher Millarworld, a move that evokes Disney’s larger purchase of Marvel in 2009. With some 100 million customers globally, Netflix should be able to comfortably survive without Disney. After all, the industry has seen this movie before.

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