When I learned that a Disney and Sony deal had been struck, I must admit that my interest was piqued. We’re living in eventful times right now, and so much has been happening with the major tech and entertainment companies lately—massive layoffs, questions about the future of media consumption (streaming being one), and its effects on those very companies—and on us, the consumers—going forward. Then there’s also the appalling state of Disney’s streaming offerings and the need to save them. In light of all this, should we care about this deal?
Well, what we know for sure is that it sent ripples through the entertainment industry. While it wasn’t a full-blown merger – the type of thing that usually causes everyone to pay attention – it’s not a deal that should be taken lightly because it means there’s a shift happening in the landscape of physical media distribution. So, let’s unpack the agreement’s details, understand its implications for industry players, and, most importantly, how it will affect consumers.
Details of the Disney and Sony Deal
Disney and Sony Pictures Entertainment decided to talk business in February this year. According to a piece by Variety, “As part of the deal, Sony will market, sell and distribute all Disney’s new releases and catalog titles on physical media to consumers through retailers and distributors in the U.S. and Canada. Disney will continue to manage its own digital media, like premium video-on-demand”. By physical media, we’re talking about DVDs, Blu-rays (and potentially 4K Ultra HD discs), encompassing both new releases and existing library titles. Disney retains control over digital distribution through its streaming platforms.
Deals of this size – or at least involving companies of this size – don’t just happen because someone felt like it. Several factors likely influenced Disney’s decision. A major one is probably that there’s been a decline in physical media sales over the last few years, with big retailers like Best Buy in the States phasing out the sale of DVDs. Streaming services like Disney+ and Netflix have become the go-to for many consumers, leading to a considerable drop in physical media purchases. So, it’s a move that allows Disney to cut costs since maintaining a dedicated physical media distribution infrastructure might not make business sense anymore. Sure, there’s an argument that can be made for the Blu-ray collectors market being the future of physical media, but for a business the size of Disney, you can’t afford to keep a division going for the sake of collectors.
The other noticeable thing this move does is to allow Disney to focus on what it does best – content creation (we’re rooting for you to do better, Disney+) and digital distribution. By partnering with a seasoned player like Sony, Disney can benefit from Sony’s expertise in physical media production and distribution, and this can potentially lead to cost savings and a well-oiled machine of a business that runs as it should – something most agree Disney needs right now.
How Will This Deal Affect Everyone Else?
As we mentioned initially, this agreement between Disney and Sony isn’t a merger. That, however, doesn’t mean it won’t have significant implications beyond just Disney and Sony. There are a few ways it will affect other players. Firstly, if other entertainment giants find the model works for Disney, they’ll do the same. To quote the children’s game, “Follow the leader”. They’ll potentially outsource their physical media production to, guess who, Sony or other third-party distributors who won’t mind the business. This could lead to further consolidation in the physical media market.
Another group of people who’ll be potentially affected by this are retailers. As we’ve already seen from the Best Buy decision, the impact of the decline in overall physical media sales is real. Best Buy won’t be the only one for much longer. Even if demand for these products returns, those interested will likely get their supply from places like Amazon. After all, retailers are in the business of space, and if what’s in the inventory stays on the shelves, it may not be worth their while.
Lastly, streaming services may feel the impact of this deal. Many in the media industry, including in this fascinating video by Digital Trends, feel that the streaming bubble has burst and that the consolidation we’re seeing (such as in the deal we’re talking about) is inevitable. So, this deal might solidify the dominance of streaming services. With fewer resources going into physical media, studios might focus more on creating content for their streaming platforms, and as they do that better, consumers will win (fingers crossed).
Disney and Sony Deal: A Sign of What’s To Come?
My view here is that to appreciate the significance of the deal entirely, there are two things we need to move our attention away from. Firstly, the most important thing here is not the demise of physical media. I feel comfortable saying this because from the moment we streamed our first songs of Napster way back when, we should have known this moment would come. Despite the presence of analogue enthusiasts (of which I am one), digital was always going to win. Yes, there’s still a sizeable population of consumers who prefer owning physical copies of their favourite movies and TV shows. Still, they pale compared to the many who prefer convenience over sentiment, despite physical media offering superior picture and sound quality compared to streaming, especially for those with high-end home theatre setups.
Secondly, it may be insignificant that this deal happened between Disney and Sony. By that, I mean that it could have been any of the major players setting up an agreement like this—we would have been affected by it because sooner or later, all the other players would do something similar, too.
I think this deal between Sony and Disney matters because it is a sign of the times and a stark reminder that there’s likely no going back now. While it might not be the death knell for physical media, it certainly makes clear that the industry is changing at an uncomfortable speed. It’s a repositioning that will lead to a new era and wars between the giants to earn our viewership, listenership and hard-earned cash. Hopefully, we’ll also see a space created for new business types where entrepreneurs can come in with new ideas so that we don’t always have to do things the way the giants want us to. In the end, while physical media is what this deal is centred around, it’s one small part of something much bigger.
What do you make of the deal between Disney and Sony? Let us know in the comments.
