What Exactly Will Happen to Television Once Disney Absorbs Fox?

Here's how Disney's purchase of Fox will affect you, the viewing public.

Disney Fox Netflix Amazon Hulu
What should the viewing public expect from the Disney-Fox merger? FREDERICK M. BROWN/AFP/Getty Images

Last Friday, shareholders from both Disney and 21st Century FOX (FOXA) voted to approve Disney’s $71 billion purchase of Fox’s film and television assets. Throughout this chase, entertainment fans have been understandably fixated on the big screen ramifications—finally, the X-Men and Fantastic Four can join the Marvel Cinematic Universe (MCU). But Disney’s real motivation in this market resetting move was to better compete with Netflix (NFLX) in the long-term. What some still may not realize is that this merger will change the television and streaming wars forever.

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Success in the subscription marketplace isn’t just about gaudy subscriber numbers; it’s about retention over the long haul. Netflix doesn’t just want to post solid Q2 numbers this year, they want to keep you on the hook for the rest of your life and then make sure your kids pick up the mantle of disposable income. The only way to accomplish such lofty goals is by offering a steady stream of engaging content—shows and movies that represent opportunities for repetitive cash flow and sustained interest.

Disney is angling for cross-generational attractions, which its Fox purchase can continue to bolster.

“Overall, Disney is picking up content that appeals to the millennial audience and, most importantly, an audience who engages with these brands and collections in a very enthusiastic manner,” Jim Fosina, CEO of Fosina Marketing Group, told Observer. “In a world where the value of a media company is represented by its ability to create content that engages and retains market-able audiences, Disney is merging with the ‘mother-lode’ of great brands and content.”

The goal, of course, is to keep one foot in the present and one eye towards the future.

“Leveraging this content can continue to keep a strong connection between young viewers and those who are growing up within the Disney family,” Fosina added.

OK, so now we can see what Disney’s ambition is with this $71 billion move: they want more of a buffet-style lineup that appeals to multiple demographics and holds name brand power. But how do they go about achieving that goal and what will it mean for you, the consumer audience?

It is here where versatility in streaming and content offerings is key. It’s likely that Fox’s entertainment assets will be split among Disney’s small handful of subscription video on demand services: it’s own family-friendly streamer launching later this year, its controlling stake in Hulu post-Fox merger and ESPN’s new standalone streaming service ESPN+.

Anticipation is high for Disney’s own platform; Hulu is the fastest-growing streaming service in the United States despite some money problems; and ESPN is hoping that its new toy can emerge as a saving grace. It’s all part of Disney’s three-pronged attack on the status quo.

“The first pillar will be Disney’s soon-to-launch streaming service aimed at family-friendly content and should house all content from its Disney-branded, Pixar, Marvel and Lucasfilm properties,” Sean Cullen, EVP of Product and Technology at Fluent, told Observer. “Hulu already established itself as a destination for mature, award-winning content such as The Handmaid’s Tale and Castle Rock. Under Disney’s control, it seems to be a natural home for Fox, FX and ABC content. Finally, Disney hopes that ESPN will emerge as a successful standalone streaming service.”

Ironically, this approach and the “cluster” strategy of Netflix is similar to the development of cable television: the emergence of special interest programming in which niche content can be hyper targeted to the right audiences.

HBO and FX are best known for their adult-skewing dramas and comedies, AMC boasts one of television’s higest-rated shows with The Walking Dead, Syfy has become a breeding ground for dark fantasy. There’s something for everyone these days, and major companies need to build content libraries that reflect the diversity of their audience’s tastes.

The Fox purchase better enables Disney to do that with a host of valuable properties.

On the movie side of things, Disney will have the opportunity to carry out Fox’s four planned Avatar sequels if they so choose, which represents potentially massive broad appeal. The Alien film franchise is running out of steam but remains a high-profile title. Why not spin it off into its own sci-fi horror streaming series for Hulu? How many hours of uninterrupted viewing can Disney generate with the back catalogs to hit shows such as Modern Family, Family Guy, Fargo, American Horror Story and more?

This move gives them immense flexibility as well as leverage; it opens up a wealth of possibilities connected to established and popular concepts with built-in followings that run the gamut of demographics.

Don’t let any sympathetic words fool you—size matters.

“There is money in maintaining and growing the size and engagement level of an audience,” Fosina explained. “There’s no better brand than Disney to demonstrate this. The company knows how to merchandise and integrate properties and assets so as to grow the overall size of the financial pot. Consumers will expect the same richness of ‘Disney World experiences’ in these new content extensions. All good news for the end user customer.”

However, the emergence of streaming powers does represent another issue that has not yet been properly examined. With Netflix, Hulu, Amazon (AMZN) Prime Video, Disney, Apple (AAPL), HBO, WarnerMedia, Facebook (META), YouTube and other online distribution platforms popping up every day, the field is as crowded as ever.

Which raises the question: are consumers trading one outmoded, overstuffed and expensive content package for another?

“As consumers sign up for more and more of the $10 a month services, many may start to wonder if we’re reinventing the cable bundle,” Cullen observed. But he doesn’t see it as a fatal flaw just yet. In the near-term, Disney has covered all of its bases throughout a lifetime of a potential customer.

Cullen continued: “Consumers’ appetite for all of these paid services may be unknown, but the upside for Disney to go direct-to-consumer is tremendous. Disney may, in fact, be the only major conglomerate with a truly womb-to-tomb market strategy.”

Star Wars Rebels is a perfect introduction to a galaxy far, far away for kids, Family Guy appeals to young adults with raunchy senses of humor, X-Files is a long-running classic for everyone and The Americans is an adult-skewing prestige drama. Everything is in place to keep your eyeballs trained on Disney content from start to finish.

SVOD bundling is an issue the industry seems content to address at a later date. For now, the main priority is scale in media, an arms race that would heat up the Cold War.

For now, the biggest winner isn’t Disney or Fox or Netflix—it’s us, the audience.

We’ll have more quality options at our convenience that represent a wider array of content interests. We’ll be able to pick and choose what we want to watch—Disney’s upcoming live-action Star Wars TV series, a back catalog of a hit FX show that landed on Hulu or any one of the attractive options being offered by Netflix, Amazon, Apple, etc.

There are potential downsides to this deal, such as market saturation, the homogenization of content and the loss of a Fox, a Hollywood power that dates all the way back to 1915. But there are also immediate positives that are being erected to stretch on well into the future.

The Streaming Wars are just getting started.

What Exactly Will Happen to Television Once Disney Absorbs Fox?