To launch its new service, Disney paid $1.58 billion to acquire another 42-percent stake in BAMTech, a company that specializes in "direct-to-consumer streaming technology and marketing services, data analytics, and commerce management".
Besides the new platform, Disney will also launch its in ESPM video streaming service in early 2018. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The current plan is for Disney and ESPN streaming services to be available for purchase directly from Disney and ESPN; in app stores; and from authorized pay-TV partners.
Disney has had to adapt to a changing landscape as have other media companies, where the high cost of cable and satellite television coupled with the wide availability of streaming services has caused many US households to stop paying for cable services.
ESPN has faced the decline of TV subscribers in recent years and as a result, it was very much on the cards that it will have its own stand alone product but disclosure of a distribution agreement with its old associate Netflix has been hard on the investors. Disney CEO Bob Iger said that the move is "a strategic shift in the way we distribute our content". Probably not another subscription to yet another streaming service, but that is what Disney fans will have to get following the news the business is pulling all of its content from Netflix and launching its own offering. While no one else now has the IP might of Disney, we are already seeing this stream-based channel approach adopted by Netflix's other big rival, Amazon. Disney's IP is staggering, over a few short years it has bought up the rights to Star Wars, Indiana Jones and Marvel - there are simply no bigger franchises out there.
Netflix had and lost Disney content before, in 2011, which it was receiving it via a deal with Starz.
"Disney's announcement was light on details and did not sound terribly well hashed out". Essentially, Disney is mimicking the Netflix model here, with an attempt to create must-see shows and films that you can't find elsewhere.
Disney didn't provide details on what the new over-the-top services are expected to cost.
While this partnership with ESPN is a strong move on Disney's part, one analyst, Brian Weiser, pointed out that, "Disney will have to be careful that it doesn't transfer too much sports programming from its TV channels to the app. Getting the balance wrong could upset cable companies and weigh on the price they pay Disney for ESPN". Disney said that John Skipper, ESPN president and co-chairman of Disney Media Networks, will manage the new ESPN-branded service.
This is not Disney's first attempt to go directly to the consumer. Subscribers will also have access to a vast collection of films and television content from our library.