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Disney ending US deal with Netflix to start its own streaming service

Disney is not going to be renewing one of its most valuable distribution relationships: its US deal with Netflix. Netflix is paying Disney hundreds of millions of dollars every year for the right to stream the latter’s films as soon as they become available for digital and DVD purchase. But that will stop in 2019, when Disney will pull out all films from Netflix and put them on its own streaming service, the company announced. Disney’s slate includes its animated films, including those from Pixar, and live-action Marvel superhero films. As such, the deal was incredibly valuable to Netflix, whose stocks tanked by 5% after Disney’s announcement (to be fair, Disney’s stock also plummeted after the announcement).

Two streaming services

Disney will be launching two streaming services: one for its own films, which will release in 2019; and an ESPN-branded service that the company says will stream thousands of sporting events each year, including Major League Baseball, National Hockey League, Major League Soccer, Grand Slam tennis, and college sports. The company did not announce pricing for these services. To run these two streaming services, Disney has paid $1.58 billion to acquire majority stake in BAMTech, a streaming tech firm that powers services like HBO Now and multiple sporting leagues’ streaming apps.

Shashi adds: Note that Netflix CEO Reed Hastings has maintained that the company will not be getting into sports streaming because it is too expensive to get rights for the same. It looks like Netflix’s loss will be Disney’s gain with the ESPN service.

It is unclear whether these services will be available globally. MediaNama has reached out to Disney India for comment.

What about Hotstar?

This January, Disney and Hotstar signed a multi-year distribution deal highly similar to the arrangement Netflix had with Disney — the deal comprised Disney’s animated films, Lucasfilm productions, live-action Marvel superhero flicks, and Pixar films. With Disney’s announcement, one of two things are possible: a) Disney will be launching the service in multiple countries including India, effectively ending its deal with Hotstar; or b) Disney will launch its Netflix competitor only in the US (or at best North America) and choose to continue relying on licensing revenue from India instead of risking going direct-to-consumer.

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MediaNama has reached out to Hotstar for comment on the future of its deal with Disney.

Written By

I cover the digital content ecosystem and telecom for MediaNama.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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