Disney cuts ties with Netflix—Here’s why

Disney is ending its exclusive deal with Netflix in favor of launching its own streaming service.

Nearly ever content provider is thinking about starting its own streaming service, so Disney’s decision doesn’t come as a surprise. Its deal with Netflix runs through 2019, which is also the year it’ll launch its own streaming service where Disney movies and content from its entities like Disney Channel will be available. Upon the launch of the Disney streaming service, the main titles that will be available will be Toy Story 4 and the sequel to Frozen.

Before the launch of a Disney-branded streaming service, Disney’s sports property, ESPN, will also launch its own standalone streaming service beginning next year. It has been a tough few years for ESPN as its cable subscriptions have been declining. Offering its own service that goes straight for cord-cutter seems like a sound business move. It will offer 10,000 sporting events throughout the year.

Disney’s willingness to branch on its own stems from its investment in BAMTech. The House of Mouse invested $1.58 billion in the company today, in the process owning a 75-percent stake in the company. The new Disney streaming service will be created using technology from BAMTech.

“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,” stated Disney CEO Bob Iger of the announcement.

The news is bad for Netflix, but not a deal breaker. The streaming giant signed the four-year deal with Disney back in 2012, but it only kicked in last year. Now it’ll lose its vast Disney-based catalogue that includes titles like Finding DoryZootopiaMoanaRogue One: A Star Wars Story and Captain America: Civil War. Netflix stated that it’s deal with Disney will allow it to keep all the titles through the end of the 2019, meaning it’ll still get dibs on the next two Star Wars movies and few other notable Marvel and Pixar movies.

For its part, Netflix has long anticipated an end in deals with big content providers, which is why it has been investing so much money in its own original content.

The big loser is customers, who will now have to subscribe to two separate streaming services.

 BLOOMBERG