On Licensing Content To Netflix, Disney CEO Is Not Very Sure

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Netflix has been investing big in original series and licensing content from networks. For Walt Disney and other media companies, dealing content to third-party platforms like Hulu, Amazon and Netflix has been a good business. But going forward, Disney may be planning to exercise stricter control on its content available on third-party platforms.

Disney evaluating its long-term strategy

It is unclear if Disney will continue to sell its shows to third-party distributors such as Netflix, Amazon and Hulu, which Disney co-owns with 21st Century Fox and Comcast, in the long term, Disney Chief Executive Bob Iger told investors on Wednesday.

According to a transcript provided by FactSet to MarketWatch, Iger said, “There is a tremendous amount, relatively near-term, meaning extra years of value to be mined from selling these episodes to third-parties.”

Being in the TV production business or basically creating a television intellectual property can be a quite good business, and “….whether we’ll continue to do that in the same way over the long-term, I think that’s unclear,” the executive said.

The comments by Iger suggest that media companies are searching for ways to invest in the future of their core businesses.

“Over the long-term, keeping the value of the platform or multichannel platform alive is critical and keeping all episodes of one series in one place on that platform could be a contributing factor,” Iger said.

Now Netflix is licensing its content to networks

As many media companies have been seeing a subscriber exodus, licensing content to third-party distributors has given a revenue boost to them recently. Analysts and industry experts started flashing warning signs late last year, suggesting that licensing deals are good for revenue, but eventually they will just be good for streaming services like Netflix and eat away at traditional cable TV.

Streaming services like Amazon, Hulu and Netflix have increased their investments in wholly-owned original content. They are not just creating content, but their content is getting popular as well. Last year, the three distributors garnered a total of 15 Golden Globe nominations for original content.

Netflix earned nine nominations, including two for Narcos, its new drama series. The streaming giant has even agreed to give Univision Communications the rights to broadcast the entire first season of Narcos on its TV network.

On Thursday, Netflix shares closed down 1.05% at $89.55. Year to date, the stock is down by over 23%, while in the last year, it is up more than 2%.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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