Amid weak quarterly earnings that saw the company bring in less profit than at this point in 2016, Disney announced it will terminate its distribution deal with Netflix and launch two streaming services of its own.
There are quite a few dissectible pieces to the announcement, the first being that Disney announced it made a $1.58 billion investment in BAMTech, which gives the former a 75 percent stake in the latter. If you have never heard of BAMTech, we do not entirely blame you, though it casts quite a shadow in the streaming world – it provides the streaming backbone for HBO, MLB, NHL, and WWE.
BAMTech originally waived the MLB Advanced Media flag before being spun off into its own company in 2015, with Disney acquiring a one-third stake in the company a year later. This deal included the option to acquire a majority stake in the future, which is how Disney was able to get a 75 percent stake.
As for Disney’s streaming future, the company announced there will be two services – one will be for its movies and TV shows, while the other will solely be for ESPN. The former will kick things off with Disney’s 2019 slate of films, which includes Toy Story 4, the sequel to Frozen, and the live-action The Lion King, along with other movies and TV shows.
This means that Disney will start cutting Netflix off its films in the same year, though the time gap means that folks can still stream the next two Star Wars movies on the latter service. Furthermore, a Netflix spokesperson confirmed the move will not affect the upcoming Marvel TV:
We continue to do business with the Walt Disney Company on many fronts, including our ongoing deal with Marvel TV.
As for the streaming service exclusively for ESPN, Disney said the service will launch sometime in early 2018. The service promises to feature around “10,000 live regional, national, and international games and events a year.” Folks will also be able to buy individual sports packages, which include MLB.TV, NHL.TV, and MLS Live.
According to Disney, the current ESPN app will be enhanced to support the new streaming service, which the company hopes will bring in a much-needed boost to the beleaguered sports network. Throughout April and May, ESPN laid off around 100 anchors, reporters, analysts, and production staffers, with the network’s deal with the NBA resulting in $400 million in incremental expenses. These expenses brought down Disney Media Networks’ operating income for the quarter year-over-year, so we would not be surprised if Disney wants to turn things around at ESPN.
Overall, the news that Disney will end its deal with Netflix is sure to make plenty of fans upset, particularly since they now have to pay for another service to watch Disney content. Even so, with its vast collection of movies and TV shows, Disney’s decision was an inevitable one.