Disney recently announced that it will soon drop its partnership with Netflix by 2019. The news came after persistent decline in both global revenue and cable subscriptions for ESPN.
“I would characterize this as an extremely important, very, very significant strategic shift for us,” said Robert A. Iger, Disney’s CEO in a recent conference call. “No one is better positioned to lead the industry into this dynamic new era,” said Iger, according to The New York Times.
The end of the Disney-Netflix partnership will begin in 2019 in the U.S. and is expected to continue gradually for the rest of the world. Iger hinted that the decision doesn’t include other Disney properties like Marvel with which Netflix has made hit shows or Lucas Film movies.
He didn’t compromise that either telling The New York Times, “It’s possible we will continue to license them to a pay service like Netflix, but it’s premature to say. There has been talk about launching a proprietary Marvel service and ‘Star Wars’ service.”
Iger also seize the opportunity to announce the buy of an additional 42% share of BamTech, a technology company providing direct-to-customer video for HBO and some baseball teams for $1.58 billion. The move will enable Disney to build a dedicated streaming service for its content.
ESPN will seek consolidation for its streaming service through its existent app, providing up to 10,000 events for on-demand programming. The ESPN-branded streaming service could be launching as soon as 2018, according to CNN.
For Disney’s content, the way to clear. With upcoming movies like the live action version of ‘The Lion King” and sequels to ‘Toy Story” and “Frozen,” as well as the wide range of Disney Channel, Disney XD, and the animated series of Star Wars (“Rebels” and “The Clone Wars”), the company has all the tools to build an attractive product.
The market shared a mixed reaction to the news with shares from both companies dropping value on the day of the announcement.