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Disney Breaking Ties with Netflix to Create New Streaming Service

Disney stock slipped by as much as four percent following the announcement that they will stream their movies independent of Netflix.

Disney’s acquisition of the BAMTech video streaming service proved to be the opening shot in a gambit to distance themselves from the Netflix juggernaut. The company will introduce both a sports-centric ESPN branded service, and a broader audience-focused service specifically for their shows and movies. It was a $1.58 billion gamble that has already cost them some measure of investor confidence.

The continued decline of ESPN viewership has already hurt Disney’s cable network revenue to the tune of about three percent under last year, while their blockbuster movie studios have experience similar troubles, with weaker overall performance.

In an attempt to strengthen both areas, Disney appears to be making a bet on the trend of streaming services-as-channels. Rather than tuck themselves comfortably beneath the blanket of Netflix’s enormous reach, Disney will create streaming services to distribute their own content.

Unfortunately for Disney, independent ventures have rarely panned out. Users are quite simply unwilling to juggle multiple subscriptions to an array of smaller, more specific services. Cable and satellite TV share a broad banner, under which a consumer can pay for a wide variety of options with one simple bill. In the current market, the idea of signing up and maintaining a different specific subscription for each channel seems cumbersome.

Of any entertainment company who might attempt this, Disney has perhaps the best shot at making it work. Their stable of family-friendly entertainment, coupled with mass-market comic book blockbusters is virtually unmatched by any other corporation in the world, and a dedicated ESPN version of the Netflix model would fill a void that currently exists in sports entertainment.

The question is then: Is any single channel’s worth of content enough to draw a respectable fraction of the Netflix crowd, or might consumers simply turn to the ever-growing library of premium Netflix exclusive content instead? One answer will mean that Disney has a stake in the future of online streaming. The other, that they are setting themselves up for a slide into popular irrelevance outside the cinema.

Follow Nate Church @Get2Church on Twitter for the latest news in gaming and technology, and snarky opinions on both.

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