How Disney's Streaming Exit Affects Netflix's Business Strategy and Future

Disney is set to remove all its content from Netflix later this year, a move that has drawn significant attention and debate among industry insiders. This change has raised questions about how it will impact Netflix and whether it will significantly alter the company's business strategy.

Background of Disney's Exit

Disney aims to have 32 million customers to break even with their streaming service, Hulu. Currently, Netflix boasts over 150 million subscribers. With this disparity in subscriber numbers, Disney hopes that some of Netflix's subscribers will switch over to Hulu, thereby bringing in the necessary revenue for Disney's streaming service to become viable.

However, not all Disney content will be removed. Some content from the Disney/Fox portfolio will still be featured on Hulu, where Disney owns a partial stake. Nonetheless, the bulk of Disney's content is being shifted to its own streaming service, which launches in late Fall.

Impact on Marvel Content

Disney's exit from Netflix has already led to the cancellation of all Marvel shows, reflecting the significant impact this move is having on both companies and their respective streaming services. This shift underscores the importance of original content in today's streaming landscape.

Shifting Business Strategy

Netflix has positioned itself not only as a streaming service but also as a content creator in the face of Disney's exit. The company has successfully shifted its focus towards producing its own content, a strategy that has seen great success with shows like 'Roma'. By taking on this role, Netflix can differentiate itself further from competitors like Disney.

With more emphasis on original programming, Netflix is likely to see a continued shift from being simply a streaming platform to a full-fledged content creator. This move is part of a larger strategy aiming to solidify Netflix's reputation as a major player in the entertainment industry, distinct from the traditional broadcasting networks.

Potential Impact on Subscriber Behavior

While some may argue that Disney's content has helped Netflix in gaining its massive subscriber base, it is unlikely that the removal of Disney content will significantly harm Netflix's business. In fact, Netflix is likely to benefit from the fact that Disney's content is ingrained in many people's viewing habits and preferences.

Users who decide to switch to Disney's streaming service will be those who find it more convenient or affordable, but Netflix remains deeply embedded in daily routines for many users. This makes it unlikely that a significant number of Netflix users will unsubscribe for the sole reason of losing Disney content.

Nor should underestimating Disney's influence be possible. However, the brand loyalty and recognition associated with Netflix, bolstered by its extensive original content, make it a formidable competitor. Netflix is already big enough to stand on its own, and both companies can coexist successfully in the market.

Conclusion

Netflix's decision not to renew Disney's Marvel shows on its platform indicates a recognition that it is more beneficial for the company's long-term strategy to focus on its own content. The removal of Disney content from Netflix is a significant step for both companies and will likely lead to an increased focus on original programming for Netflix.

While the immediate impact on Netflix may not be profound, the long-term shift towards content creation will significantly alter the company's business landscape. As a content creator, Netflix can further differentiate itself from competitors and solidify its position in the streaming industry.