Disney Takes a Majority Stake in BAMTech, Ends Netflix Deal
Disney shook the streaming industry with a one-two maneuver that signals even bigger moves ahead. First, it announced it will acquire a majority stake in BAMTech for $1.58 billion. Disney purchased a one-third stake from MLB Advanced Media for $1 billion in August 2016 with the option to take a majority in the future. Today, it made good on that option and will take an additional 42 percent for 75 percent total.
Second, Disney announced it will end its current distribution agreement with Netflix beginning with the 2019 season. This will remove all Disney and Marvel movies from the subscription service.
The plan, Variety reports, is for Disney to launch two direct-to-consumer streaming services in the near future. The first is an ESPN-branded service that delivers a variety of sports content, including 10,000 live games and events per year. It has deals in place with MLB, NHL, MLS, and Grand Slam tennis. While this service was originally planned for late 2016, it should debut early next year. Second, the company will launch a Disney-branded video service in 2019. It will be the exclusive U.S. home for Disney and Pixar SVOD content, and will include Toy Story 4 and the Frozen sequel. It will feature Disney Channel, Disney Junior, and Disney XD TV content, as well exclusives created just for the service.
"This represents a big strategic shift for the company," Disney CEO Bob Iger told CNBC. "We felt that having control of a platform we've been very impressed with after buying 33 percent of it a year ago would give us control of our destiny."
Superhero fans, take heart: In the same interview, Iger said that development on Marvel shows created with Netflix, such as Daredevil and Jessica Jones, will continue. Additional content could be co-created, he said, noting that Disney has a good relationship with Netflix.
Both Disney and Netflix's stocks tumbled in after-hours trading.
"While losing Disney content is a blow to Netflix, keep in mind that Netflix still has a dominant lead in the sector—48 percent of Americans have it, compared to 16 percent for Amazon Prime, its closest competitor," notes Jordan Cohen, CMO of marketing platform Fluent. "Only 10 percent subscribe to a more premium service like HBO Go. So, it will be interesting to see how Disney prices its service and if it will be low enough for a large enough number of Americans to sign up for it in addition to their core Netflix subscriptions and the growing number of people getting on Amazon Prime."
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