Why Netflix, Inc. (NFLX) Stock Isn't Doomed Without Disney

Erica Roy
August 12, 2017

Following a deal to acquire a majority stake in streaming tech business BAMTech for $1.58 billion, Disney will launch a direct-to-consumer streaming service in 2019, as well as an ESPN-branded sport video streaming service in early 2018. The movies were previously released in theaters, but these Marvel shows were released exclusively on Netflix.

Aside from offering all their latest releases as well as the back catalogue of all Disney movies, you will also be able to watch Pixar movies and if you like their TV shows, content from Disney XD and the Disney Channel.

Disney has yet to determine where it will stream "Marvel" and "Star Wars" films, according to CEO Bob Iger.

High School Musical movies - Disney is "Breaking Free" from Netflix and said "I Gotta Go My Own Way" - a typical break-up.

The change of heart comes as Disney sees a need to take the industry, now dominated by Netflix, head-on.

Disney has made the decision to drop Netflix's streaming services and create their own. There's been talk of launching proprietary Marvel and Star Wars services, he said on Disney's earnings call on Tuesday.

Disney is still working out the specifics of the service, but the company said it would be the "exclusive home in the USA for subscription-video-on-demand viewing of the newest live action and animated movies from Disney and Pixar".

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Some Twitter users expressed frustration with losing access to their favorite Disney movies on Netflix.

The Walt Disney Co. has finally given in to the streaming shift that has completely altered the media landscape in the last few years and battered the company's world-wide leader in sports programming, ESPN.

When launched in 2019, Disney's service will include Toy Story 4, the sequel to Frozen, and The Lion King.

"While the stock may respond negatively in the near term, the potential value creation over the next 5 years is likely worth well above the implied ~$2-$3 billion in Disney's EV from the Netflix deal", Janedis said in a note to clients. Netflix should prepare for a Disney-free future, which it may have already started doing with its purchase of comic book publisher Millaworld, but as of now its universe of Marvel TV shows will continue to move forward.

The Disney announcement follows a similar announcement from CBS Corp.

He said, too, that the possibility still exists that Disney will license other titles to Netflix down the road. Consumers are also more comfortable using pay-TV alternatives than they were in the past, and there is a greater chance consumers will sign up for multiple OTT services rather than just look for one provider - cord-cutting has reduced monthly spend on video entertainment, so potentially there are funds that have been "freed up" for a new service.

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