How Hollywood is Racing to Catch Up with Netflix

The Netflix effect across the entertainment business has taken root in deep and meaningful ways this year. The turmoil caused by Netflix’s meteoric rise is all that media moguls could talk about last month during their annual conclave at the Allen & Co. conference in Sun Valley, Idaho.“Just look at the state of our business,” one prominent CEO observed, with equal parts fear and wonder in his voice.

The direct-to-consumer streaming video business model refined by Netflix is the reason Disney and Comcast chased 21st Century Fox with such fervor. It was a big part of AT&T’s motivation for scooping up Time Warner. It marks the biggest shift in entertainment industry economics in decades, and it is an evolution largely driven by a company that has been in the original content business for barely six years.

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“The modern media company must develop extensive direct-to-consumer relationships,” AT&T chairman-CEO Randall Stephenson told investors last month. “We think pure wholesale business models for media companies will be really tough to sustain over time.”

Traditional media conglomerates feel the urgency to act now out of fear that Amazon, Facebook, Apple and Google are also busy crafting global content platforms that will dwarf their operations. It’s no surprise that Disney — the world’s biggest media company — is leading the race among Hollywood’s old guard to catch up with Netflix, et al. Disney chairman-CEO Bob Iger calls the planned launch of a suite of DTC services “the biggest priority of the company during calendar [year] 2019.”

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Published on August 21, 2018 at 8:16 am by mikedup

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