Disney Will License Content to Netflix — but Not Pixar, Marvel, or Star Wars
Brian Welk
Warner Bros. Discovery made some news this week by revealing that some big-name DC movies and shows would join other major HBO series as part of licensing deals with Netflix. WBD CEO David Zaslav defended it on this morning’s earnings call, and it was so eyebrow raising that an analyst decided to ask Disney CEO Bob Iger the same thing if we could one day see any flagship Disney content on Netflix.
Yes, actually. Just nothing major like Marvel, Pixar, or Star Wars. They’re doing just fine on Disney+, and they don’t need to license it out just to “chase bucks,” Iger said.
“We’ve actually been licensing content to Netflix, and are going to continue too. We’re actually in discussion with them now about some opportunities, but I wouldn’t expect that we will license our core brands to them,” he said during the Q4 earnings call this afternoon. “Those are real — obviously — competitive advantages for us and and differentiators. Disney, Pixar, Marvel, Star Wars, for instance are all doing very, very well on our platform. And I don’t see why, just to basically to chase bucks, we should [license them out] when they are really really important building blocks to the current and future of our streaming business.”
In Warner Bros. Discovery’s defense, there’s a lot of content that is going untapped and could be getting the “Suits” bump by sharing it with Netflix. Zaslav further defended it by saying that nothing that is licensed is for an exclusive deal, they won’t license something “unless the economics are significant,” and in the long run it helps drive people back to Max so they can watch the other DC movies and HBO shows that aren’t on Netflix.
For Disney, the content it has licensed to Netflix is also little seen, under-served content that could be getting more love elsewhere. But there’s been very little of it on Netflix since the inception of Disney+ (a rep for Disney did not immediately respond to a request for comment about exactly which titles). If Iger is going to make Disney+ profitable, which he said today he still expects to do by the end of 2024, he’s going to need those core brands to make it happen.
Disney also intends to do that by merging Disney+ with Hulu in a single app experience, at least as soon as the deal for Disney to fully acquire Comcast’s one-third stake in Hulu closes. Today Iger revealed a beta version of the merged app will launch next month, mainly to give parents time to set up parental controls before your kids are subjected to “The Bear,” “Family Guy,” and “9-1-1.” The app will officially go live spring 2024.
All this is part of a larger plan by Iger to prioritize “quality over quantity” and get Disney back to its dominant heyday from before Covid. Iger said that coming out of the pandemic, Disney leaned into more content to bolster Disney+, and ultimately the quality suffered. “We lost focus,” he conceded, and things weren’t “up to the standards” Disney sets for itself.
So moving into 2024, interim CFO Kevin Lansberry said Disney expects that in its next fiscal year it will spend approximately $25 billion on content, a cut of $2 billion compared to what Disney ultimately spent on content in 2023.
The $27 billion Disney spent this year was already way down from expectations at the start of the year, which were closer to the low $30 billion range, largely because of the strikes shuttering production for over half the year. Lansberry also said that roughly 40 percent of the content spend is on sports rights. That works out to about $10 billion on sports and $15 billion on everything else.
$15 billion on film and TV content puts Disney closer in the ballpark to what rivals like Netflix and Warner Bros. Discovery spend each year. Netflix at the start of 2023 was expected to spend about $17 billion on content and arrived at closer to $13 billion because of the strikes, but the streamer expects to be back at that $17 billion level next year. Warner Bros. Discovery also was projected to spend in the ballpark of $20 billion on content, but it too has a lot of sports rights to deal with.
