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Disney to pull out content from Netflix by 2019; will launch its own streaming service

Netflix stock slumped following Disney's announcement; investors worry that other content providers might do the same.

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The online streaming space is about to get hotter. Disney, the creator of umpteen memorable movies and TV shows, is starting its own streaming service in 2019, and has thus, decided to pull out all its content from Netflix. Disney announced on its website that it is making significant investments in the new service which will become an “exclusive home” for video-on-demand viewing of all live action and animated movies from Disney and Pixar. “With this strategic shift, Disney will end its distribution agreement with Netflix for subscription streaming of new releases, beginning with the 2019 calendar year theatrical slate,” it said.

Disney will also invest in an annual slate of original movies, TV shows, short-form content, and other Disney-branded exclusives for the upcoming service. Additionally, the service will feature a collection of library content that includes Disney and Pixar movies, and programs from Disney Channel, Disney Junior and Disney XD television. But before that, in 2018, Disney will launch an ESPN-branded multi-sport video-streaming service that will offer an array of sports programming, including 10,000 live regional, national, and international games per year, and marquee events like Major League Baseball, National Hockey League, Major League Soccer, and Grand Slam tennis. ALSO READ: Netflix surpassed cable TV users in America for the first time this quarter: Statista

These are big plans, and indicates how serious Disney is about the subscription VOD market in the US, which has now overtaken traditional cable television. Top cable TV providers in the US added 48.6 million new subscribers in Q1 2017. Netflix alone added 51 million users in the same period. Netflix competitor Hulu is growing as well, with over 12 million paid subscribers now. The increasing dominance of video-streaming services over traditional television is led by aggressive pricing, and availability of diverse content. However, despite all its growth, Disney pulling out its content is not good news for Netflix. Its stock slumped five percent on Tuesday as soon as news broke. ALSO READ: Facebook is getting serious about original programming; will take on Netflix 

Netflix investors are already worrying about other content creators going the Disney way. While Netflix’s original programming is fairly popular, curated content still drives usage. And the loss of Disney’s much-loved family-oriented content library will leave its own impact. Moreover, there are newer players getting into original programming. Facebook, for instance, is said to be in talks with major Hollywood studios for the development and production of quality shows “aimed at audiences from 13 to 34”. The social networking giant is even willing to shell out $3 million per episode. Apple too debuted its first original show in June, and its recent hires — top TV executives from Sony Pictures Television — indicate that there are more in store.

  • Published Date: August 9, 2017 1:29 PM IST