Streaming Wars: Do Netflix and Disney+ Have a Monopoly Problem?

The entertainment industry has undergone a seismic shift with the rise of video-on-demand (VOD) streaming services, which have challenged traditional television and cinema models. Among the leading players, Netflix and Disney+ dominate the market, commanding significant market share and consumer attention. This dominance raises concerns about whether these platforms are engaging in monopolistic practices, warranting scrutiny under competition law and economic theory.

Market Dominance and Competition Law

A monopoly exists when a single firm controls a substantial portion of a market, limiting competition and consumer choice. In the context of streaming services, Netflix and Disney+ collectively account for a significant share of global subscriptions. While other platforms, such as Amazon Prime Video and Apple TV+, contribute to market competition, their subscriber bases and content libraries are dwarfed by the extensive reach of Netflix and Disney+.

Under UK and EU competition law, monopolistic behaviour is regulated to prevent abuse of market power. While mere dominance is not illegal, engaging in anti-competitive practices - such as predatory pricing, exclusive content deals, or restrictive licensing agreements - could violate legal frameworks designed to foster fair competition.

Barriers to Entry and Consumer Choice

One of the primary concerns with the streaming duopoly is the creation of high barriers to entry for new competitors. Unlike traditional television networks, which rely on advertising and syndication, streaming services require extensive infrastructure, licensing agreements, and original content investment. Netflix and Disney+ leverage their financial power to secure exclusive content deals and acquire intellectual property, thereby making it difficult for emerging platforms to gain a foothold.

Moreover, content fragmentation has led to consumer subscription fatigue. Unlike the early days of streaming, when Netflix offered a broad catalogue of third-party content, the industry has now fragmented into multiple subscription-based platforms. This shift has forced consumers to subscribe to multiple services to access desired content, inadvertently creating a monopolistic dynamic where a few dominant platforms control access to major franchises.

Vertical Integration and Market Power

Disney+ presents an interesting case of vertical integration, as The Walt Disney Company owns not only the streaming platform but also vast content production studios, including Marvel, Pixar and Lucasfilm. This consolidation allows Disney to exert significant control over the distribution of its intellectual property, limiting availability on competing platforms. Such practices resemble historical concerns in the Hollywood studio system, where vertically integrated studios controlled production, distribution, and exhibition, leading to antitrust interventions.

Netflix, on the other hand, employs a different strategy by heavily investing in original programming and leveraging data analytics to optimise viewer engagement. This reliance on proprietary algorithms and user data could also raise regulatory concerns under digital competition laws, particularly regarding personalised pricing models and content recommendation.

Regulatory and Legal Considerations

Given these concerns, regulatory bodies in the UK, EU and the US have taken steps to monitor the streaming industry. The European Commission has expressed interest in ensuring that dominant platforms do not engage in anti-competitive practices that stifle market diversity. The UK’s Competitions and Markets Authority (CMA) has also scrutinised digital markets, emphasising the importance of maintaining consumer choice and preventing unfair competitive advantages.

While streaming services continue to thrive, regulatory intervention may become necessary to prevent excessive market concentration. Potential solutions include enforcing content-sharing requirements, limiting exclusive licensing agreements, and promoting interoperability between platforms to enhance consumer access.

Conclusion

The dominance of Netflix and Disney+ in the streaming industry raises valid concerns about monopolistic behaviour and market competition. While both platforms have revolutionised entertainment accessibility, their market control necessitates ongoing scrutiny from regulatory bodies. As the streaming wars continue, balancing innovation with fair competition remains crucial to ensuring a diverse and consumer friendly digital entertainment landscape.

References and Further Reading

"Digital Markets Competition Report" (Competition and Markets Authority)

Competition Act 1998 (UK)

"Competition Law" (OUP)

"Market Concentration in the Digital Economy" (OECD)

"Netflix Nations: The Geography of Digital Distribution" (NYU Press)

"Regulation of Digital Markets and Platform Economy" (European Commission)

"Streaming Media: The New Digital Divide" (Palgrave Macmillan)

"The Age of Surveillance Capitalism" (Profile Books)

"The Business of Media Distribution: Monetizing Film, TV, and Video content in an Online World" (Routledge)