Disney ditches Netflix US to start its own streaming service
James R | On 09, Aug 2017
Disney is ditching Netflix to start its own streaming service.
The surprise decision was announced yesterday by the House of Mouse in an earnings call with shareholders. If the words are sounding familiar, that is because Uncle Walt’s empire has already done the same thing in the UK, with the launch of standalone subscription service DisneyLife, which includes not just films but Disney TV shows and other content. Evidently, Disney has been pleased with the performance of the app so far, because it is now expanding that strategy to the USA.
The new Disney-branded service will become the exclusive home in America for subscription-video-on-demand viewing of the newest live action and animated movies from Disney and Pixar, beginning with its 2019 theatrical slate – which includes Toy Story 4, the sequel to Frozen, and The Lion King from Disney live-action, along with other highly anticipated movies. Disney will also make a “significant” investment in original movies, TV shows, short-form content and other Disney-branded exclusives for the service. The service will also feature a vast collection of library content, including Disney and Pixar movies and Disney Channel, Disney Junior and Disney XD television programming.
The deal will not impact Netflix subscribers in the UK, with effectively all of the Disney titles having been moved from the site’s catalogue to DisneyLife’s library, but it marks a major shift in the balance of power in the streaming world: it was only a year ago that Disney signed an exclusive deal up until 2019 with Netflix US, and Disney taking it right back may well deal a big blow to the VOD giant’s appeal to families with kids. Disney’s clout in the entertainment industry cannot be underestimated: it currently owns not only Disney, but Pixar, Marvel and Lucasfilm, making it the home of some of the largest franchises around. Disney has even rumoured in the past to be planning to buy out Netflix altogether. The parting of the ways in 2019, though, puts that speculation to bed.
It also indicates the direction in which the online video landscape is headed, as big brands increasingly choose to adopt their own streaming service rather than sign a deal with a third party VOD player. Indeed, Starz pulled titles from its library on Netflix a few years ago, while CBS is now planning to expand its All Access SVOD service overseas. Disney is also doing the same thing with its sporting network, ESPN, following a 9 per cent fall in the company’s profit this quarter, which was attributed to declining subscribers to ESPN. The ESPN streaming service will launch in 2018, before Disney’s new platform launches the following year.
All of this is being funded by a $1.58 billion investment in BAMTech, a direct-to-consumer streaming provider. Disney previously acquired a 33 per cent stake in the firm under an agreement that included an option to acquire a majority stake over several years, and this week’s announcement marks an acceleration of that timetable for controlling ownership, giving Disney full control over its streaming plans.
“US Netflix members will have access to Disney films on the service through the end of 2019, including all new films that are shown theatrically through the end of 2018,” a Netflix spokesperson confirmed to Engadget. “We continue to do business with the Walt Disney Company globally on many fronts, including our ongoing relationship with Marvel TV.”
In the UK, meanwhile, Sky’s existing agreement with Disney still stands.