One of the most polarizing figures in the media analysis business, BTIG’s Richard Greenfield has become known for his pessimistic viewpoint on traditional media bundlers (particularly the Walt Disney Company) and his bullish stance on SVOD services, most notably Netflix.
Speaking to Recode, Greenfield said that Disney erred badly with aggressive content licensing deals to Netflix that have allowed the subscription video-on-demand leader to quickly grow its global user base.
“Disney made a very big mistake, and I think if you talk to people inside of Disney, they very much regret the deal they did. They really empowered Netflix in a way,” Greenfield said.
For years, the analyst said, media companies like Disney licensed their best shows and movies to Netflix.
“Not just their leftovers, their good stuff,” he explained.
This shortsighted strategy, Greenfield contends, fertilized a powerhouse competitor that now has a comparable market capitalization.
“Some [media giants] said, ‘Oh my god, everyone else is selling. If we don’t sell, our margins will be worse, or our profits will be worse. So even though we know it’s the wrong thing to do for the business, do we sell or not sell?’ And it’s total prisoner’s dilemma, of it’s going to happen with or without you, and so we’ll sell too.
“And then Netflix actually has all of this content, and they can say, ‘We don’t need that, and you know what? We’ve learned what people like. We’re going to go out and start making stuff ourselves, like Stranger Things and 13 Reasons Why, and we don’t even need your content as much as we used to.”
In hindsight, media companies should have seen it coming—plenty of traditional networks grew into powerhouses on the backs of third-party licensed programming in the past.
“Remember, HBO used to be old people’s movies,” he said. “AMC used to be American Movie Classics. And remember FX? FX used to be Ally McBeal and X-Files reruns. Everyone starts in the media food chain or the entertainment ecosystem with other people’s old stuff.”