A whole new world….
Netflix took a major blow on Tuesday when Disney announced it will remove all of its content in 2019 to start its own streaming service. ESPN, which Disney owns, will start a streaming service in 2018. From The Hollywood Reporter:
Details of the Disney streaming service were sketchy Tuesday, with CEO Bob Iger saying that if a movie is Pixar- or Disney-branded, it will probably appear exclusively on the new service — including shows and movies made specifically for the service — but the jury is still out on Marvel and Star Wars films.
ESPN has been losing TV subscribers for a few years and an online stand-alone product has been predicted for months, but ending a distribution agreement with Netflix beginning with the 2019 theatrical slate caught investors off-guard and Netflix shares quickly sunk 4 percent on the news in after-hours trading.
Iger called the initiatives “a strategic shift in the way we distribute our content.”
Disney sort of dropped the hint last year when it acquired the majority of the shares of a certain streaming technology company. NBC News reported:
The news follows Disney’s majority-share acquisition of BAMTech, a streaming technology and marketing company it first bought one third of last year for $1 billion. Disney said Tuesday that it purchased an additional 42 percent of the company for $1.58 billion.
“The media landscape is increasingly defined by direct relationships between content creators and consumers, and our control of BAMTech’s full array of innovative technology will give us the power to forge those connections, along with the flexibility to quickly adapt to shifts in the market,” Disney Chairman Robert A. Iger said in the release.
Bloomberg points out this will not cause the death of Netflix, but more than likely the move will greatly affect the company considering the popularity of Disney content.
As for Marvel, the shows Luke Cage, Jessica Jones, and Daredevill will stay on Netflix for now.
We also do not know if Disney will share content on Hulu even though it owns a stake in that streaming company. The Disney executives said that a multiyear deal it made with Hulu to stream some content “will not be affected by Disney’s upcoming service.” But they did not expand on what would happen after the deal expires.
ESPN has continued to slide, causing a big revenue problem:
Disney’s biggest segment, media networks, saw revenue drop 1 percent year-over-year to $5.9 billion and operating income plunge 22 percent to $1.8 billion, with ESPN mostly to blame.
Disney said ESPN’s problems included higher programming costs, lower ad revenue and costs associated with severance packages for departing employees.
Broadcasting, though, didn’t perform much better than did cable, with the ABC television network also seeing higher programming costs and lower ad revenue.
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