Disney Opts to Launch Its Own Streaming Service, Leaving Netflix

During its recent earnings call, Disney dropped a bombshell announcement that is bound to leave waves in the streaming world: the company intends to part ways with Netflix and launch its own independent streaming service. This significant move, anticipated to take place in 2019 in the US, initiates Disney’s trust in a direct-to-consumer approach and signifies a seismic shift in the entertainment industry.

Moreover, as part of this strategic transformation, Disney is first slated to debut an ESPN video streaming service in early 2018. This initiative comes amidst tremendous pressure on ESPN, aimed at curbing the continued exodus of viewers who are abandoning traditional TV-viewing habits in favor of online streaming platforms.

Disney, as the world’s leading entertainment company, is placing a calculated bet on its own in-house streaming service. Unlike its current model of leasing its rich movie library to Netflix, Disney is banking on long-term profitability generated from an independent subscription-based service tailored to its repertoire of movies and live sports events.

However, this strategic leap by Disney has evoked diverging opinions among Wall Street experts regarding its implications. Analysts suggest that Disney’s foray into a congested subscription streaming market, and the associated technology costs of establishing its own online platforms, could potentially hamper its earnings.

Echoing the analysts, Brian Wieser, Analyst at Pivotal Research Group, states that while Disney’s direct-to-consumer model experience in Britain could prove fruitful over the long term, the immediate financial impact of such a move may not be as advantageous.

Unfazed by these predictions, Disney CEO Bob Iger remains optimistic about the company’s new direction. In his statement during the earnings call, he emphasized the independence and control Disney’s own streaming service would offer as the entertainment industry undergoes rapid shifts. Iger described the new initiative as an “entirely new growth strategy” for the company.

Disney also shared details about its forthcoming ESPN service, which is expected to broadcast roughly 10,000 live games and events annually from leagues like Major League Baseball, the National Hockey League, and Major League Soccer. The company was clear, however, that the service will not cover marquee live sports events being shown on its cable channels.

Disney is not the first to sever its ties with Netflix – Starz Entertainment undertook a similar move in 2011 when it pulled out a swath of films from its extensive catalogue. Disney’s departure, however, could resonate more strongly given its prominence on Netflix.

Disney’s distribution plan for some of its movies remains under review. Regardless of the movies’ future home, Netflix has made clear its intent to continue its global business relationship with Disney even as their current movie deal draws to a close.

In light of this significant news, Netflix’s shares saw a 5% plunge. But for consumers and industry watchers, the move promises exciting chapters ahead in the evolution of streaming services.