“It’s much more a marathon than a sprint,” he said. “We like what we’ve seen from Netflix… but it’s going to be really hard for them to corner the market or get a monopoly” because the barriers to entry in SVOD are lower than they’ve been in traditional media.
Disney cut a deal with Netflix in December 2012, under which the Internet video company will obtain exclusive access to new and catalog titles in the pay TV window in the U.S. after Disney’s pact with Starz expires at the end of 2015. Netflix will pay Disney $200 million to $300 million annually for the streaming rights, according to analyst estimates.
But Disney is willing to work with other Internet TV providers, Iger said. Asked about services being developed by Intel Media and Sony to challenge traditional pay TV providers, he said Disney has been “platform agnostic for years… We’re completely open to selling our product to them.”
“We’ve taken the position that we’re better off being first or near first offering content to these platforms,” he said.
Netflix had 29.8 million U.S. streaming subscribers as of June 30, and 7.8 million internationally. The company expects continued growth but faces mounting competition from Amazon.com, which has bulked up its content lineup and like Netflix is producing original series.
As far as how Netflix is affecting Disney’s TV biz, Iger said the company has not seen evidence of consumers dropping pay TV service “because they can watch hundreds and hundreds of hours on Netflix.” That said, the Mouse House topper reiterated his position that TV Everywhere extensions — such as WatchESPN and WatchABC apps — that let cable and satellite TV subscribers watch programming outside the home are critical to reinforce the value of the traditional linear bundle.
“The most dramatic change I’ve seen in the media business is the growth of smart mobile devices,” Iger said.
Also during the session, Iger said that Disney does not see any potential acquisitions the size of Lucasfilm or Pixar on the horizon.