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Is This Netflix’s Response to the Disney Walkout?

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Netflix hires ABC hitmaker

Netflix’s (NFLX) net has caught a gigantic fish in the movie creator ocean. The streaming video company is hiring Shonda Rhimes, a prolific television producer and the force behind several ABC hit shows including Grey’s Anatomy and Scandal.

ABC is one of the media properties owned by Walt Disney (DIS), which has decided to stop licensing its shows to Netflix. Instead, Disney will be reserving its shows and movies for its own upcoming streaming video services, which should rival Netflix, Hulu, and Amazon.com’s (AMZN) Prime Video.

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Pay-TV providers responding to subscriber loss

Pay-TV companies Disney, Comcast (CMCSA), and Dish Network (DISH) have been hit by diminishing subscriber bases as people move to video streaming services on the Internet. Meanwhile, traditional pay-TV providers are reacting to this customer outflow by launching their own Internet streaming video services.

As the traditional pay-TV audience shrinks, digital video viewership is growing globally. The chart above shows digital video viewership and penetration in the US (SPY), according to eMarketer.

Battle for movie talent

Whether or not Netflix’s move to hire Rhimes is a response to Disney’s decision to deny it its content, the move shows another step in the escalating battle for movie talent. Apple (AAPL), Amazon, and Netflix have, at various times in recent months, raided Hollywood and recruited prominent producers for their streaming services.

Notably, Apple doesn’t have an online video service that can be compared with those of Netflix or Hulu, but it has been adding videos to its streaming music service, Apple Music.

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