Disney will end its distribution deal with Netflix and launch its own streaming service, the company announced today. It intends to launch the service in 2019.
The move is a real blow to Netflix, which secured a valuable streaming deal with Disney back in 2012 — before streaming had really taken off. The deal only kicked into effect last year, so Netflix is barely seeing any benefit here.
At the same time, it’s a natural step for Disney, which has a huge library of valuable movies and shows to offer. Disney already makes it hard to get a lot of its top movies — requiring people to purchase, rather than rent, a film for instance — so it makes sense that we’re seeing the company try to draw even bigger profits from streaming.
It sounds like Netflix won’t lose the Disney movies it already has, at least for a little while. Disney says it plans to cut Netflix off starting with the studio’s 2019 films. That means Netflix should get the next two Star Wars movies, but it’ll miss out on the new trilogy’s final installment. Netflix didn’t immediately respond to a request for comment.
Disney’s streaming service will be built off technology from BAMTech, the MLB-founded video streaming platform. Disney was already a major investor in BAMTech, and today it’s making an even bigger investment — of $1.58 billion — giving it a 75 percent stake in the company.
“This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the company, one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands,” Disney CEO Bob Iger said in a statement accompanying the announcements.
On top of a streaming service for Disney movies and TV shows, the company will also launch a streaming service exclusively for ESPN, targeted for a launch early next year. The company is promising about “10,000 live regional, national, and international games and events a year,” with individual sports packages available as well. Disney plans to sell both of its subscription services directly to consumers.
ESPN has increasingly been a point of concern for Disney. The channel is expensive, which has led consumers and cable providers to look for ways to drop it from their package or otherwise cut costs. Being able to sell it straight to consumers lets Disney tap into the market of cord cutters who have been missing out on sporting events, while potentially increasing the amount of money it makes per subscriber.
The Disney-branded streaming service will be the “exclusive home in the US for subscription-video-on-demand viewing,” and will kick off with films including Toy Story 4 and the sequel to Frozen. “Original movies, TV shows, [and] short-form content” will be added to the service, and it’ll be filled out with older movies from Disney and Pixar’s catalog and shows from Disney’s TV channels.