Disney parts ways with Netflix and announces its own streaming services

Disney is seeking a direct line to TV viewers in a strategy shift. In the home market, the exclusive deal with Netflix is being cut, and in 2019 there is to be a streaming service of its own for Marvel superheroes, "Star Wars" or Pixar's animated films.


Next year, the program of the in-house sports channel ESPN will be available on the Internet, followed a year later by a streaming service for Disney's movies and series, which will then - at least initially in the U.S. - be available on the Internet only there.

In exchange, Disney will terminate its exclusive deal with streaming service Netflix for its home market. Netflix shares fell more than three percent in after-hours trading on Tuesday.

Disney's advance could accelerate the transformation of the American TV landscape. Until now, channels like ESPN have mostly been accessible via cable and satellite contracts. But thanks in part to streaming services like Netflix and Amazon Video, so much content is already available online that more and more households are canceling their expensive TV subscriptions. That's why Disney CEO Robert Iger is now seeking a direct line to consumers in a strategy shift.

Other broadcasters are already going down this route, too. The pay channel HBO, for example, shows its programming online, and the CBS broadcasting group announced only on Monday that it would also offer its streaming service internationally. But Disney, with its lineup of popular children's characters, animation studio Pixar, and Marvel superheroes and "Star Wars," is in a league of its own as a viewer magnet.

Profit slump as a warning

The figures for the past year were an alarm signal that Disney has to change something. Compared with the same period last year, profits fell nine percent to $2.4 billion in the three months to early July. Revenues fell slightly to $14.2 billion.

Higher programming costs and user attrition continued to be a key problem at sports broadcaster ESPN. Operating profit at the TV division, which includes the ABC broadcast group, fell 22 percent to $1.84 billion.

The film division was unable to build on the cinema successes of the previous year, and only the theme park business was buzzing. Both the quarterly figures and Disney's plans for the future were not particularly well received on the stock market: The share lost 3.8 percent after trading hours.

Participation in tech provider

In order to technically manage the offensive in streaming, Disney is increasing its stake in technology provider BAMTech from 33 percent to a majority of 75 percent for around $1.6 billion. Netflix already sparked speculation about a possible end to the Disney deal when the streaming service announced earlier this week that it was buying comic book publisher Millarworld, with series such as "Kick-Ass" and "Kingsman" already filmed.

Netflix currently runs superhero series with Marvel characters belonging to Disney, such as "Daredevil". This cooperation is to continue, it was said on Tuesday. Netflix, which has already been focusing on its own series and films for years, obviously secured itself against the loss of Disney content with the acquisition. (SDA)

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