The ability to stream some of Disney’s most valuable sports and films without a cable-TV subscription shows how rapidly the business is changing.
Walt Disney Co., once again shaking up the media industry, said it will stop selling movies to Netflix and begin offering ESPN sports programming and family films directly to consumers via two new streaming services.
Disney’s online entertainment service will begin in 2019, the Burbank, California-based company said Tuesday. Starting next year, an ESPN online service, which the company had said was in the works, will feature 10,000 live events a year, including Major League Baseball, hockey, soccer and tennis, as well as college sports.
Investors didn’t have to look far to find out why Disney suddenly chose to upend its business. The company reported a rare drop in revenue and profit — from falling ad sales at ESPN and a decline at the film division. The moves show how seriously Chief Executive Officer Bob Iger views the threat from streaming services like Netflix and Amazon.com and their impact on conventional pay-TV.
“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,” Iger said in the statement.
Shares of Disney fell 3.8 percent in after-hours trading Tuesday after the announcements. Netflix, which is losing a key supplier, lost 3 percent.
The ability to stream some of Disney’s most valuable sports and films without a cable TV subscription shows how rapidly the business is changing.
The new Disney entertainment service will feature Disney films, as well as new programs and content from the company’s Disney Channel library. Those will include movies from the Disney studios and Pixar, but not Marvel or Lucasfilm, the producer of “Star Wars.”
The immediate fallout for Netflix is minimal, though investors may fear other Hollywood studios will move against the company and more carefully restrict what they sell to the online service. Netflix will spend more than $6 billion on programming in 2017, much of it from other media outlets, and has a long- term budget of $15.7 billion.
“U.S. Netflix members will have access to Disney films on the service through the end of 2019, including all new films that are shown theatrically through the end of 2018,” Los Gatos, California-based…