Disney Ditches Netflix for Own Streaming Service

The move could accelerate the trend toward "cord cutting" in which consumers drop extensive cable TV bundles in favour of streaming services such as Netflix. Last August, Disney acquired a 33% stake in BAMTech, which is a spinoff from Major League Baseball Advanced Media, for $1 billion.

A dedicated ESPN streaming service should be up and running by early next year. This will begin with the 2019 release slate which includes Toy Story 4, Frozen 2, and Disney's live-action Lion King. The new yet to be named Disney service will obviously carry movies from Disney and Pixar.

Disney's service will be built using technology from video streaming platform BAMTech, which it just invested an additional $1.58 billion for a 75 percent stake in the firm. A similar deal is not in place for Netflix Ireland, which only has a small selection of Disney films. Disney won't be able to charge more than Netflix for its significantly smaller content library, and it will also come at the expense of even more people flying off of cable and satellite services.

Walt Disney said on August 8 it will end its distribution agreement with Netflix for new releases beginning with the calendar-year theatrical slate in 2019, when Disney plans to start a direct-to-consumer streaming service.

"This represents a big strategic shift for the company", Iger said to CNBC.

"We'll also be making a substantial investment in original movies, original television series, and short form content for this platform, produced by our studio, Disney Interactive and Disney Channel teams", said Iger.

In 2019, it will launch a direct-to-consumer streaming service featuring its treasure trove of animated and live action films, along with exclusive new content as well.

"For many sports fans, this app will become the premier digital destination for all their sports content", Disney said in its announcement. JPMorgan analyst Alexia Quadrani says Disney shares remains "very attractive" near current levels, given that Disney has one of the strongest content portfolios in the industry.

"This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the company, one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands".

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