Effects of the Disney:Fox Merger | Tech Critic

Effects of the Disney/Fox Merger

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Effects of the Disney:Fox Merger | Tech CriticEarly in the morning on Wednesday, March 20th, Disney closed in on their $71.3 billion acquisition of 21st Century Fox assets, dwarfing their 1995 purchase of Capital Cities/ABC. This is the largest acquisition in the 96-year history of Disney. The closing of this merger ends the nearly two-year-long journey, chronicling back to December 2017. 21st Century Fox becomes just another major acquirement to the Disney umbrella, joining Marvel, Lucasfilm, Pixar, the Muppets, and more.

Whether this deal ends up being a success is too far away to guess, but Disney seems to have one foot in the present while maintaining their focus towards the future. However, many closely involved in the media industry have their suspicions and fears following this massive merger.

Effect on Traditional Media

Following the completion of this deal, Disney now owns the intellectual property of Marvel Comics characters like the X-Men and Fantastic Four, strengthening the Marvel Cinematic Universe that has been dominating the box office for a decade. They also gained major properties like Aliens, Avatar, and The Simpsons, to name a few. Their strength worldwide became bolstered as well due to the deal including the rights to Fox India. This merger gives Disney control over roughly 40% of the worldwide box office. Naturally, this level of power comes with its fair share of scrutiny.

While Disney doesn’t release too many movies themselves, they still struggle to release movies in a space that allows each property the chance to receive the most success at the box office. With a whole library of properties to choose from, Disney will have to be more thorough with the selection of film they opt to release and when. It seems that Disney will only have to compete with themselves to rule the box office, removing the pressure to create more varied and risk-taking content. Their current model of filmmaking already has its own share of strict limitations, and once you add in the limited competition, those limitations may get stricter. It appears Disney may put less focus into properties Fox owned that would directly rival their own, such in the case of Fox’s animation studio Blue Sky Studios.

Disney has also been notorious for the way they conduct their business with theaters as they demand a much larger split from ticket sales than any other studio. In the case of Star Wars: The Last Jedi, they demanded a massive 65% cut of the tick sales which led to many theaters, especially smaller, independent cinemas, from simply not showing these films since it would hurt their overall gross. In Brazil, a handful of theaters boycotted showing Coco due to the cut Disney demanded. This merger will allow Disney more leverage in striking these deals with theaters since there will be far fewer alternative studios to choose from.

Future of Streaming

The increasing popularity of cord-cutting, or the removal of cable providers in favor of online streaming services, has left the world of traditional pay-for-television a much more difficult product to operate in. Providers and distributors are locked in disputes in a sluggish, or some would say dwindling, revenue pool. Yes, adding properties like FX, National Geographic, and many Fox Regional Sports Networks to their catalog would help in many situations, but it won’t solve the over-arching problems in this world.

Prior to even announcing their play in the purchase of Fox, Disney severed their ties with streaming giant Netflix in favor of running two streaming services of their own: ESPN+, focusing on sports programming, and Disney+, for all other film and tv properties under their umbrella. Bob Iger, Disney’s chief executive believes the newly acquired Fox assets will help their planned future in streaming services.

“The pace of disruption has only hastened,” Mr. Iger told The New York Times in an interview when the deal was announced. “This will allow us to greatly accelerate our direct-to-consumer strategy, which is our highest priority.”

Along with their proposed streaming service set to debut later in 2019, Disney is now the majority shareholder of Hulu, another major streaming service as well. It’s obvious that Disney wants to push forward the boundaries of direct-to-consumer platforms, but by isolating themselves from other services, they create an issue similar to the one in theaters: giving viewers fewer opportunities to view their content. However, Netflix has evolved from less of a distributor of other studio’s products to a producer of the content itself, Disney seems set to do the same on their platform as well.

Regardless of the overall outcome of this merger, Disney’s acquisition of Fox will have industry wide effects that appear set to change it for good. While for some fans of the products, like Marvel fans happy to see the X-Men potentially appearing on screen with the Avengers, the overall quality of the film industry may suffer. The lack of competition may force Disney to take far less risks than they already took which was few to begin with. Disney’s stake and investment in streaming services whether on Hulu or their own seem poised to push the boundaries of technology and the direct-to-consumer strategy further than before. Even if the consumer won’t feel it immediately, the way the entertainment industry operates is set to see monumental changes.

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