Disney has now announced a plan to part ways with Netflix in a clean break intended to free up the company to promote its own digital streaming services. Although the company has not yet revealed very many details, the decision was announced today alongside Disney’s quarterly report. The previous licensing deal between the two media giants was struck back in 2012, which gave the then up-and-coming streaming service access to a huge array of Disney content. As part of the deal coming to an end, Disney CEO Bob Iger says that Disney and Pixar Movies will be removed from Netflix. However, the end comes after what Iger calls a “good relationship” and Netflix says that Disney’s titles will remain available through the end of 2018, with shows under the Disney-owned Marvel branding set to stay on indefinitely. With that said, Disney’s decision was most likely made easier by the fact that Netflix has been suffering some pretty severe ongoing financial problems. Perhaps unsurprisingly, when the revelation was made, Netflix’s own stock value immediately dropped more than 5 percent.
Disney’s decision also could not have come at a better time. Streaming services are rapidly overtaking traditional cable and television services. In fact, a recent analysis conducted by UBS shows that growth in streaming services actually surpasses the decline of traditional services by nearly double the rate. Moreover, a series of surveys conducted by Fluent, LLC add substantial weight to those findings. The study included over 2,267 participants in the U.S. and found that streaming services are vastly more popular than other services, mirroring the sentiments discovered by the UBS analysis. It was also revealed that 71 percent of millennials enjoy exclusive and original content, streamed over an array of devices through a paid service, more than the content that exists cross-platform or on TV. The same group also showed a preference for binge-watching episodes rather than watching shows as they come out on a weekly basis, at a ratio of almost 65 percent to 35 percent. Additionally, a relatively high percentage of millennials showed an interest in streaming live sports event – at around 31 percent of those surveyed. All of that adds up to a perfect storm for Disney to launch its own service with its wealth of intellectual properties.
As to what Disney plans to do with its intellectual property and licensing, the company announced that its as-yet-unnamed direct streaming services will be launched in 2019 after the partnership with Netflix officially ends. It has also been revealed that the service will launch first in the company’s home country – the U.S. – with expansion to the rest of the world happening sometime after that. Disney’s service will serve as a platform for streaming all of its movies going forward from that point, including theatrical releases currently planned for 2019. Beyond that, the company has plans to invest extensively in new exclusives in both film and television for the platform, though no exact figures were mentioned as to how much of an investment Disney is willing to make. For sports fans, yet another service will be launched in 2018 bearing the company’s ESPN branding. Through that service, customers will have access to around 10,000 sports events every year, including content from college sports, tennis events, Major League Soccer and Baseball, and the NHL.
