Disney shares slide after company says it's splitting with Netflix

Disney shares slide after company says it's splitting with Netflix

The media landscape is increasingly defined by direct relationships between content creators and consumers, and our control of BAMTech's full array of innovative technology will give us the power to forge those connections, along with the flexibility to quickly adapt to shifts in the market.

According to Disney CEO Bob, the company is deciding whether to continue their film licensing with Netflix, contract a different streaming service, roll both Marvel and Lucasfilm into its own streaming service, or completely launch a separate platform.

Disney said it will also make a "significant investment" in an annual slate of original movies, TV shows, short-form content and other Disney-branded exclusives for the service. Subscribers will also have access to a vast collection of films and television content from our library. He included that not only movies but also the shows will come under this category. The service has about a fourth of the subscribers as Netflix, but is backed by NBCUniversal, FOX, Disney, and Turner.

Disney acquired a 33% stake in BAMTech past year, but has said that it has now invested a further $1.6 billion to boost its stake to 75% and will acquire control of the company. That cinematic beach-head should help drive consumers to the Disney streaming service's television content. Disney's shows that air on Disney Channel and ABC, for instance, have reportedly dipped in profitability amid the cord-cutting trend among young viewers.


"The Disney product is taking a very successful and settled part of the business model (pay TV economics for films) and putting it at risk in the hopes of building an asset with more long-term value", Cowen and Co analysts wrote in a research note. "Yet, we've merely scratched the surface of what can be accomplished in a future where we combine Disney and ESPN's world-class [intellectual property] and our proprietary direct-to-consumer ecosystem". These announcements from Disney and CBS suggest that process is well underway. BAMTech is widely viewed as the leading platform for streaming media.

It's likely it would eventually take the TV channel bundle approach that Sky offers now in the United Kingdom, offering sport (ESPN), Disney, Marvel and Star Wars channeled content for varying prices.

And there's Disney's greatest advantage, which is that it has an extremely powerful global brand for children's entertainment.

Netflix has over a year before it has to go head to head with Disney but it is inevitable that it will lose domestic subscribers due to this. However, Netflix's track record for investing in quality original content has proven to be a differentiator for the service and will likely hold it in good stead.

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