End Credits Are Rolling For The Movie Industry

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Written By Saeed Maleki

If Disney comes through talks and buys the movie making side of 21st Century Fox, the move could trigger a major sea change in the global media industry.

Fox, Disney, Sony and a few other majors dominate movie making but are losing ground to interloping tech companies with money to burn.

Standing in the wings are Netflix, Amazon, Google and Apple.

Amazon has already set up a TV and movie making franchise to supply content to Amazon Prime.

Netflix is raking in cash from around the world with high quality productions like The Crown and Stranger Things.

Stars flock to Netflix and Amazon

While Google has just set up YouTube TV and Apple has moved into production as well.

None of these companies blink at shelling out $100 million to finance a series.

Technology companies are attracting the biggest stars, best writers and top production workers because they are where the money is going.

The change in the movie economy is closeness to the consumer. Amazon’s Firestick, Google’s Chromecast and Apple TV put the tech companies in direct contact with consumers.

But the traditional media outlets rely on distributors, such as cinema chains or paid-for TV to act as middlemen to reach their viewers.

Broken business model

Fox suspects the model is broken and that now is the time to ditch studios and everything that goes with them in favour of news and paid-for programming via outlets the company owns such as Sky and Fox.

TV and movies have changed.

Despite a resurgence in cinema numbers, the business still needs costly real estate for cinemas that stand empty without earning money for most of the day.

At home, families no longer sit around the TV at the same time every week to watch a favourite series. They binge watch box sets online and like to pick and choose to view when the time suits them.

Disney must expand or die

Importantly for the old mega-movie brands, the advertisers are moving online as well.

But a Fox/Disney deal could spell bad news for Netflix. Disney has already pulled a lot of content from the streaming service. With Fox in their stable, the new conglomerate controls 24% of the Netflix content and could move to stream the output through the Disney brand.

Analysts believe Disney must expand or die. The company has a quality library, but is not big enough to compete online coming to the streaming party a decade after Netflix.

Netflix has 109 million customers and a war chest of $8 billion to make content in 2018.

Disney has no streaming base and a budget of $13 billion for the coming year.