On the backdrop of ESPN looking to start its own streaming service owing to viewers increasingly shifting to online sources instead of more expensive cable TV options, Walt Disney Co has also announced that it will stop providing new movies to Netflix Inc. starting in 2019. The defection comes on the back of news that Disney will be opening its own streaming service in an attempt to capture digital viewers who are shifting away from traditional television.
The decision has been made on the assumption that in the long run, the company can generate more profits from their own streaming service as opposed to renting out their movies to third party services like Netflix. The move will undoubtedly weigh on Disney’s revenue in the short term, but that is probably a hit that the company is willing to take in order to ensure greater control over their content in the future.
The streaming service will be based on technology provided by video-streaming firm BAMTech, a firm that Disney plans on acquiring majority stake in.
How does this affect Netflix?
Although expected to be an exit by one of the biggest banners held by Netflix, the streaming network is not new to labels pulling out of deals. Starz Entertainment in 2011 pulled roughly 1,000 films in the Starz catalog on Netflix at the time.
Despite the fact that the service will definitely have to consider upcoming competition from one of the biggest brands in the industry, at the end of the day, it all boils down to the fact that, it has been operating in a market with very stiff competition for quite a few years and it hasn’t crumbled as of yet.
This is mainly because of the fact that, besides hosting content produced by all the big entertainment industry banners, streaming services like Netflix, Hulu and Amazon also host original, exclusive content that viewers won’t find anywhere else. For instance, Disney won't have "House of Cards," "Orange is the New Black" or "Stranger Things." David Letterman's new show can’t be streamed on Hulu. He just signed with Netflix. Even Jerry Seinfeld is moving "Comedians in Cars Getting Coffee" from Sony's Crackle to Netflix.
So, in the end, what might happen is that, viewers who ardently stream shows on the internet, might just decide to opt for multiple streaming services, meaning everyone gets a piece of the pie.