Disney is ending a deal to distribute the company's movies over Netflix and will launch its own streaming-video service.
The Disney app will be the exclusive source for streaming animated and live-action Disney and Pixar movies, starting with 2019 releases like "Toy Story 4" and the sequel to "Frozen."
As part of that shift, the entertainment giant said Tuesday it will buy a controlling stake in BAMtech for $1.6 billion.The agreement with Netflix will end in 2019, when Disney expects its new platform to be available. BAMtech, founded by Major League Baseball, provides direct-to-consumer streaming services to MLB, National Hockey League and PGA Tour, among other customers.
Disney also plans to kick off its ESPN streaming service in early 2018. It will air baseball, hockey and soccer games, tennis matches and college sports through ESPN's mobile app.
"Today we announced a strategic shift in the way we distribute our content," said Robert Iger, CEO of The Walt Disney Co. (DIS), in a statement. "This acquisition and the launch of 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."
ESPN has been a sore spot for Disney, with Iger previously acknowledging that the sports network is shedding subscribers.
Since then, concern over ESPN's dimming prospects have dampened investor enthusiasm for Disney itself, despite its success with theme parks, Marvel superheroes and Star Wars films.
The big fear: ESPN might be facing long-term decline as more people quit cable or choose cheaper bundles without sports.
Over time, that could kick off a death spiral in which fewer subscribers mean less money for ESPN to use in bidding for sports rights; fewer games to air would then give more subscribers reason to quit.