The Battle Between Netflix And Disney Is Heating Up

There's no argument that when it comes to streaming video, Netflix (NASDAQ:NFLX) is the 800-pound gorilla in the room. The company is a pioneer in the industry and has made decisive moves to remain at the top of a growing list of competitors looking to make their mark in the evolving media landscape. When it comes to potential rivals, Disney (NYSE:DIS) is among the most often named as having the intellectual property and the resources necessary to take a serious run at Netflix.

This article originally appeared in the Motley Fool.

Disney put Netflix on notice in August 2017, when the company announced it had acquired a majority ownership in BAMTech, the streaming unit of Major League Baseball, and would launch two streaming services in the coming years: an ESPN-branded streaming service in early 2018, and a Disney-branded direct to consumer service in late 2019.

Since that announcement, the competition between the two has intensified, with Netflix poaching a growing list of high-profile talent from Disney and its television segment ABC.

Raiding Disney's coffers

The most recent sign of the escalating rivalry came as Netflix hired former ABC Entertainment Group president Channing Dungey as vice president of original content. While at ABC, Dungey was credited with shepherding a "wide variety of successful programming" including The Good Doctor, Black-ish, How to Get Away with Murder, and The Goldbergs. She was also responsible for "helping reinvigorate long-running series, such as Grey's Anatomy," according to Netflix.

Dungey is the latest in a series of high-profile defections from ABC and Disney over the past 18 months. Emmy and Golden Globe-nominated writer and producer Kenya Barris, best known as the creative mind behind Black-ish, Grown-ish, and Girls Trip, signed a three-year deal with Netflix in August worth as much as $100 million.

Late last year, Disney announced that it would acquire the film and television assets of Twenty-First Century Fox (NASDAQ:FOX) (NASDAQ:FOXA). Shortly thereafter, Netflix poached Emmy, Golden Globe, and Peabody Award-winning producer, director, and writer Ryan Murphy from Fox, in a deal reportedly worth $300 million.

Murphy has serious credentials in the television realm, with a long list of bona fides at Fox, including Glee, American Horror Story, Nip/Tuck, 9-1-1, Feud, and American Crime Story: The People v. O.J. Simpson.

This followed another notable coup by Netflix, which inked a deal with Shonda Rhimes and her Shondaland production company worth as much as $100 million. Rhimes spent 15 years at ABC, creating such noteworthy programs as Grey's Anatomy, Scandal, and How to Get Away with Murder.

Disney struck first

While Netflix is wholeheartedly poaching television talent from ABC and Disney, it's important to note that Disney started the ball rolling when the company announced its streaming ambitions. In the press release, it said, "With this strategic shift, Disney will end its distribution agreement with Netflix for subscription streaming of new releases, beginning with the 2019 calendar year theatrical slate."

Another recent development also attests to the growing tensions between the two. Over the past five weeks, three Netflix series that were collaborations with Marvel have been canceled. First came word that Iron Fist and Luke Cage would be getting the axe, followed by news that fan favorite Daredevil was also being canceled. That leaves only Jessica Jones from the original Defenders foursome, and spinoff The Punisher. When the decision was made to discontinue the programs, no reason was provided.

What it all means

Netflix's growing roster of talent features some of the most prolific content creators in Hollywood. By locking them into exclusive content deals, Netflix will own their creations outright, rather than having to negotiate for them later. The company has been working to distinguish itself from potential competitors with a growing library of exclusive programs that can't be found anywhere else.

With 135 million subscribers worldwide and growing, Netflix wants to have something for everyone. By cutting out the middlemen (and women) and going straight to the source, the company gains a much more cost-effective strategy than licensing the shows after they're already on the air. By nabbing proven showrunners like Dungey, Barris, Murphy, and Rhimes, the programs stand a much greater likelihood of being hits -- and that's what Netflix is ultimately shopping for.

Danny Vena owns shares of Netflix and Walt Disney and has the following options: long January 2019 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.