How Disney will force Netflix to change streaming

– Right now, we’re living in a golden age of streaming services. For $15 a month, one
service can give you access to basically endless movies and shows, with new offerings coming in every week. But enjoy it while it lasts,
because wheels are already in motion to make those
services more profitable for companies, and worse for you. Someday soon, to get the
same amount of content you’re getting now,
you’re gonna have to pay for more streaming services. (introspective music) So think about all the content
on a service like Netflix, and where all of it comes from. A lot of what you see is made by Netflix, but most of it’s not, whether it’s network TV shows, old movies, or movies that were just in theaters. A study last year found
that licensed content makes up 80% of what people actually watch. Netflix pays to license that
content from the studios, and it’s a big part of their business. Access to the streaming
market is important for studios, too, because
streaming media is where the viewers are. Netflix added 30 million US subscribers in the past five years,
and that’s coming at a time when traditional cable and broadcast TVs have
less viewers every year. But licensing to Netflix, Hulu, and the other services isn’t the only way for studios to get their movies online. Next year, Disney plans to launch its own streaming service, a
direct competitor to Netflix. Disney’s a little late to the party, but the service will have
so much popular content that it may not matter. Remember, Disney owns
Pixar, Marvel, Star Wars, and 21st Century Fox, along
with more than 90 years of beloved movies and TV. The bad news is, if it’s
on Disney’s new service, it doesn’t really make sense
to put it on Netflix, too. Once Disney’s current
licensing deals expire, Coco, Guardians of the
Galaxy, and Last Jedi are all probably gonna disappear from the other streaming services. It’s a simple business move. Why would Disney put Last Jedi on Netflix when it can put it on Disneyflix and make you pay another
$15 a month for it? Even if Netflix offered to
pay more money in licensing, Disney would rather have you watch their movies on their service. Disney is actually really
good at making money when distribution methods change. If you look at the history of the company, they’ve done it over and over again. When VHS and DVDs became popular, Disney pioneered a system
called the Disney Vault, where movies would be
locked away for years, and only made available for
lucrative, limited-run sales. – [Narrator] All these
magical Disney videos before they disappear. – Whether you love or
hate the vault, it worked. A study in the year 2000
found that 55% of Disney fans replaced their VHS tapes with DVDs, compared to only 14% for other studios. Cable expanded the
playing field even more. Initially, Disney licensed
its content to HBO, but soon they realized
that the real money was in running their own channel. So the Disney channel was born. Last year, Disney made 40% of its money from cable channels, including
the ABC networks and ESPN. And as cord-cutters move away from cable, towards services like Netflix,
Disney’s trying to pull off the same trick with streaming video, using its massive content library to build a whole new
service from the ground up. Now, Disney’s not the only
studio trying to do that. Comcast has its Xfinity streaming service, Time Warner has HBO Go. The only way to see the
latest Star Trek series is by paying six dollars a
month for CBS All Access. Everybody’s vertically integrating, which means there’ll be less and less third-party content
available to license. If you wanna follow all
the movies and shows, you’ll have to pay for all the services, and there’ll be more and
more of them to pay for. If you’ve noticed a lot more
Netflix Originals lately, that’s why. If you can’t find Star Wars
or Iron Man on Netflix, executives are betting you’ll stick around for Stranger Things
and BoJack Horseman, just like you stuck with
HBO for Game of Thrones. So if you follow a bunch
of streaming services now, you might soften the blow
by borrowing the password from your parents or friends, but that could be in danger, too. Streaming services can shut down account sharing anytime they want. Just look at Spotify, where sharing accounts
is nearly impossible. Netflix is slowly cracking
down on account sharing, too, adding distinct profiles, and stopping any profile that streams
multiple shows at once. As the industry matures,
those rules are gonna tighten, and it’s gonna get harder and harder to dip into a service
without paying for it. Now, for corporations,
this is about the money. Disney paid four billion
dollars for Star Wars, and they wanna make that money
back as fast as they can. But all that leaves the
general interest fan in a tough place. Do you stick with a
single streaming service, and miss out on the next
wave of Marvel movies? Is the new Star Trek really
worth six dollars a month? We don’t know what the future of streaming will look like, yet. The transition away from
licensing could be jarring, or it could happen slowly, over years. Competition between the new services could inspire a new
golden age of TV shows, or everyone could fall back on old tricks and familiar franchises,
but whatever happens, the pipeline between the camera and your screen is gonna
get a lot more controlled, and if you want the same amount of content you’ve been used to, you’re gonna have to pay more. Thanks for watching, I hope you liked it. If you want more free
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