Disney pulls out of Netflix: A first of many?

By Poojil Tiwari

On Tuesday, Disney announced the end of its content selling agreement with Netflix. This means come 2020, Netflix will no longer be showcasing Disney movies including the blockbuster Avengers series. Disney CEO Bob Iger also announced the launch of two new independent streaming services. 

By 2018, the company plans to launch an ESPN streaming service, which would broadcast more than 10,000 live sporting events. They also plan to introduce a direct to consumer streaming service for Disney movies and other visual content.

How it all played out

The shares of both companies dropped post the announcement. While Disney’s shares dropped by 2.6 percent, Netflix lost approximately 3.5 percent of its shares. The deal between Disney and Netflix, which was struck late last year had always been in troubled waters. On Monday, Netflix had announced their partnership with Nick Millar’s comic label, Millarworld.

The move gave Netflix access to a wide variety of comic book reserve to tap into. Netflix then had an entire world of characters that it could adapt and evolve, much like Disney’s Marvel Cinematic Universe. However, the very next day, Disney announced the end of its distribution deal with Netflix.

Netflix in deep waters

Netflix has a hugely popular original programming line-up comprising of shows such as Orange is the New Black and House of Cards. Additionally, its multiple distribution deals with television studios make it a dominant television network. However, it has not been able to carry forward this monopoly into the film industry. The streaming giant faces a severe lack of successful original content when it comes to movies.

In fact, movies streamed via its content streaming partnerships with various production houses such as Disney constitute a majority of Netflix’s film business. In such a scenario, Disney leaving Netflix does not set a good precedent. Moreover, many production houses are now looking to capitalise on the increasing popularity of direct to consumer streaming services. While Disney is the largest supplier yet to withdraw its material from Netflix, the folks over at Time Warner and 21st Century Fox have announced plans to reduce sales to the streaming service.

The road ahead for Disney

While Disney may have announced its separation from Netflix, as per the existing contract between the two companies, all Disney movies shall be available on Netflix at least until 2019. This includes movies under the Marvel Cinematic Universe and the Star Wars series. However, it is still not clear whether all of Disney’s movies will be available on its new streaming platform.

As of now, the streaming platform will only include movies produced under Disney and Pixar’s banner along with Disney’s core content such as shows from their television channels — Disney and Disney XD. Therefore, movie franchises such as the worldwide phenomenon —  Star Wars series and Avengers series, may very well end up staying on Netflix or may be broadcast on a different streaming service.

A strategic move?

During the press conference on Tuesday, Disney CEO Bob Iger said that the move is an attempt to establish a more interpersonal relationship between Disney and its viewers by removing third party involvement. While Disney’s popularity cannot be denied, their inability to put their entire material under one roof may serve as a potential deal breaker for the viewers.

Moreover, it remains to be seen whether viewers will be open to the idea of multiple streaming services. At present though, Netflix does have the upper hand and is secure in the knowledge that at least until 2019, Disney viewers aren’t going anywhere.

Featured Image Source: Flickr