Will China be the decider in the Netflix vs. Disney+ fight

The wild and unprecedented success of Disney Avengers: Endgame has signalled that the era of the theater may not end without a fight. Maybe like Chris Evans’ Captain America said: ‘Whatever it takes,’ is the mantra that may keep it afloat for the time being. Veteran filmmakers from the world over like Steven Spielberg, Christopher Nolan, Anurag Kashyap (India) and Jee Won Kim (South Korea) all agree that the theater is here to stay. But there are others like Joe and Anthony Russo, Disney’s blue-eyed Marvel directors, who believe that the era of streaming platforms is not far-behind from over-taking the world.

The seemingly unstoppable success of video-streaming platform Netflix was the first sign that the era of the theater may be coming to an unceremonious end. And now that Disney, Apple, Amazon, Hulu, HBO, WarnerMedia and NBCUniversal have jumped onto the video streaming bandwagon, the future of the theater may really be in jeopardy. But most of these companies have both the television and the theater to thank for for their gigantic net profits, so the question arises: Are they really ready to let their meal ticket go down without putting up a fair fight? Is it more about aligning the company’s vision to have a chance at survival given the changing viewing patterns of the audience or more about having a presence in every market to just gain more and more profit?

Amidst this heating up debate, there is one area that has remained largely untouched by external elements. One of the largest markets for American and global content is China. Avengers: Endgame minted nearly $500 million in the first three days since its release in the country. But given that Netflix is not operational in the country, can it be the one market that changes the game?

When China rules the world

From a socio-economic standpoint and not just a geopolitical one, China has remained largely untouched by external factors. Besides having one of the largest workforces in the world, it also has the largest untapped market for western entertainment. Besides Disney, which promises wholesome family entertainment, very few studios or movies have been able to leave an indelible mark on the market. China has been overtly responsive to certain movie stars like Tom Cruise and Aamir Khan (India) but it has remained largely unresponsive to most movie stars.

China vehemently denies access to foreign social media platforms and chooses to encourage local entrepreneurs to create their own. They also push their own citizens to innovate so that their indigenous products are used the world over. Several of the products, like Tik Tok and Dubsmash have momentarily left their mark on the world. The country takes full advantage of having a ‘utilitarian’ government and keeps a tight grip on all their media productions. Most of which are closely monitored and censored by the government.

However since Bob Iger took over as the Chairman of Disney, he has been wooing several Chinese officials to open their market to Disney and their products. Not only has he been successful in establishing the wildly successful Shanghai Disney World, he has also been able to carve a comfortable niche’ for several Disney movies to release and make a home in the Asian superpower.

China has slowly become one of the biggest consumers of Disney’s content. The primary indicator for the same is box office success all Marvel movies witness in the country. Admittedly, most Marvel movies are released there a few days before the rest of the world, but they end up adding enormous value to Disney’s coffers.

Why China could be the decider?

Video streaming platform Netflix has already made several unsuccessful attempts to penetrate the Chinese market. Besides the country’s stringent economic policies, they are wary of allowing foreign companies to establish a base in the country, unless they (chinese natives) have financial benefit from the deal. Other companies that have already made their mark in the country are Apple and Disney. Most of Apple products are assembled in the country and then shipped the world over. The tech-giant is banking on this fact when they launch their own streaming service. They are hoping that the Chinese government will be open to allow them to stream their shows in the country. But in January, Apple claimed that its sales in China fell by almost a fifth, shaking their share prices in North America.

China’s current population is 1.4 billion and is touted to grow at 0.59 per cent annually. Which means, if Netflix were given access to the country, they could easily double their total subscribers in just a few years. Netflix currently claims that it has 139 million subscribers from close to 200 countries and China is not one of them. Instead of a direct launch in China, Netflix signalled that it was open to a joint venture with iQiyi, a Chinese streaming service, in early 2017. But that deal lapsed because the two parties could not agree to a workable model. The problem is that Netflix cannot allow their syndicated shows to stream in the country and their Original shows may not be allowed. So they may have to start from scratch. On the other hand, Disney already has a foothold in the country. Even Iger was invited for a meeting with their president, Xi Jinping, which if you are a geopolitical noob, is a very big deal.

But why does Disney repose faith in China?

The answer to this involves several layers. One of which is geopolitical. The United States and China are currently locked in a vindictive trade war which is making it very difficult for American companies get a foothold in the Asian country. The opposite does not hold at all. Chinese companies, including mobile handset manufacturers like Huawei, have successfully established their dominance in several sectors in America. Also, China currently possesses a sizeable amount of the $6.2 trillion debt that America has to external parties. So, America is leveraged against China and despite its best efforts, it has been unable to pay off some of the debt. Even if it does, China goes and buys more of its debt. Because of its single party system, China is able to think in the long-term i.e. in terms of decades and centuries.

Coming back to Video On Demand, the principal problem any external party will face is China’s policy that limits number of foreign shows that can stream in the country. So the best option that is available to companies is to tie-up with local streaming partners like iQiyi, Tencent Video or Alibaba’s Youku and make a foray into the market with more native content. And make more tailor-made shows for the audience once they have a better understanding of the consumer consumption patterns. However, a lot of these plans will remain in limbo given the state of the current trade war America has with China. But given that Disney already has experience of dealing with China in the past, it can be assumed that the entertainment conglomerate has a plan for all the expected outcomes to the current trade war.

  This begs another question: Is it only China that will decide the fate of this fight between Netflix and Disney+?

What do Joe and Anthony Russo believe?

Captain America: Civil War, Avengers: Infinity War and Endgame director duo Joe and Anthony Russo have highlighted another aspect to thiWill China be the decider in the Netflix vs. Diney+ fights fight. They believe that this fight, more than anything else, is about quality vs. quantity. Netflix is at volume, and they have to get their volume to quality. Disney is at quality, and they’ve got to get volume. It’ll be interesting to see who achieves their goal first, because that will determine market dominance,” Joe Russo has said. But both the Brothers do firmly believe that both streaming and theatrical releases are here to stay. Both the brother were quoted in a Variety article where they said: “We’re talking about trillion dollar companies using content as a branding tool,” said Joe. “Some say the death knell for theatrical is streaming, but [“Endgame”] is proof that they are supercharging each other,” he said.

But they do believe that it is a good time to be in the entertainment industry. With the number of shows that have already hit the market and the number of shows that will come out now, production houses are willing to spend money on talent. And with the number of shows that are being made, there will be no dearth of job opportunities. What this move has also done is that it has made television production houses to pull up their socks and focus more on the quality of content. In recent times, only Game of Thrones was able to successfully lure over 10 million people to the television. Most other television shows are failing to maintain regular audience numbers week over week.

So maybe the competition is not about China. Maybe it is one of quality and quantity alike. May the best man win!

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