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Disney CFO: Netflix/Marvel Deal Follows ‘Avengers’ Strategy

10 Dec, 2013 By: Erik Gruenwedel

Disney CFO Jay Rasulo

Studio’s agreement to produce four original mini-series for Netflix based on Marvel’s flawed heroes of Hell’s Kitchen will culminate in ‘The Defenders’ mini-series — a strategy first employed for ‘The Avengers’ feature film, Jay Rasulo tells investor group.

Disney's announcement last month that it would create four original live-action mini-series for Netflix based on Marvel’s flawed heroes of Hell’s Kitchen, follows a blue print the media company set producing The Avengers — the top box office movie of 2012, CFO Jay Rasulo told an investor group.

Speaking Dec. 10 at the UBS Global Media and Communications confab in New York, Rasulo said the focus on the 13-episode "Daredevil" series launching on Netflix in 2015, followed by series based on characters "Jessica Jones," "Iron Fist" and "Luke Cage," emulates Disney’s strategy releasing Thor, Iron-Man and Captain America movies separately prior to Avengers.

“How can we extend the value of this original content into the [home entertainment] ecosystem?” Rasulo said. “A content deal with Netflix seemed incredibly consistent with their own strategy and ours. We were ready to look outside of our own networks to a different point of distribution.”

Indeed, the four mini-series will conclude with “The Defenders,” a compilation series not indifferent from The Avengers, according to Rasulo. He said the studio spoke to other subscription video-on-demand services besides Netflix regarding the Marvel deal. The CFO said it ultimately came down to economics. Netflix’s growing subscriber base dwarfed the competition.

“We try to be advantageous to Disney in how we look at using the different [SVOD] players in the market for us,” Rasulo said. “I think [Netflix/Marvel deal] is going to lead to great results. It’s a little bit like The Avengers strategy, its does origin series on four different characters.”

Mobile Key to Entertainment Distribution

Moving content to mobile channels is the single largest technology in terms of impact on the entertainment industry, consumer benefit, and Disney, according to Rasulo. Specifically, the CFO believes a virtual MVPD is coming. He said such an entity would buy bundled programing from Disney — a policy Rasulo said Disney would mandate with other content holders.

“The offering to consumers would have to look a lot like what is now offered on cable, satellite and Telco,” Rasulo said. “It’s certainly coming, and we would certainly be happy to a license our content to a virtual MVPD. It provides a huge opportunity for us to get our content out to consumers that heretofore we have not been able to reach.”

Disney enhances the MVPD infrastructure online via myriad branded “Watch” apps licensed to distributors for mobile viewing. Rasulo said mobile affords viewers portability as well as a second screen. He eyes apps as an enhancement to a mature infrastructure providing video content.

Meanwhile, Rasulo believes mobile will be the primary means of content access in Europe and international territories. For example, Disney remains ready to enter India once it gets a 4G network running, according to the CFO.

“Like any product, it’s only successful if the consumer sees value in it,” he said. “Today, we believe the [current] MVPD system, and the way that product is offered, is still the most valuable way content can be offered to the consumer.”

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