The well-known media behemoth Disney (NYSE: DIS) recently announced their plans to end the distribution of Disney and Pixar films on Netflix (NASDAQ: NFLX) by 2019. The termination of the licensing deal between the two companies will only effect film deals made in America, where Netflix is currently allowed to stream Disney movies after they are no longer in theaters. The maker of the recent popular hits such as "Moana" and "Beauty and the Beast", however, will now create its own streaming service in 2019. The new streaming platform will depend on Disney's relationship with the streaming service BAMTech, a company in which Disney plans to have a majority ownership worth $1.58 billion.
Disney's new streaming service with reportedly include live action Disney and Pixar films, as well as certain shows from its television networks like Disney Channel, Disney XD and Disney Junior. As for content created by Marvel Studios and Lucasfilms, motion picture entities that are also owned by Disney, Netflix is currently discussing the future of well-known titles like "Guardians of the Galaxy" and "Star Wars." Chief Executive Officer of Disney Bob Iger did not give much information on such action films, and recently told analysts that Disney has not yet decided the fate of Marvel and Lucasfilm movies.
Along with Disney's new streaming service, Disney also plans to release an sports streaming service under ESPN, a sports television channel that is the result of a joint venture between Disney and the Hearst Corporation. The new athletics hub will reportedly be released in 2018.
The future of Netflix now depends on its success with original content. Due to the rising cost of licensing movies and shows from outside companies, Netflix has been forced to distribute its own creations. Original hits like "Stranger Things", a popular science fiction drama proved to be beneficial for the company. This can be shown by the rising amount of Netflix subscribers over the years - while its library has been reduced to almost 50%, Netflix's subscription rate has increased by a steady rate ever since. This strategy, of course, has not gone unseen. It appears that Disney desires the same effect through its own streaming service. While this may seem trivial, Disney's decision to create a streaming service may be the beginning of a plethora of different streaming services from different media companies and networks. One example of this could be a streaming service by a network like Fox (NASDAQ: FOX), who could offer content from the network itself, along with Fox Sports 1 and the Fox-owned television channel FX. The rising competition between streaming services will inevitably place Netflix in an interesting position, one of which may limit the company to providing only older movies and television shows.
While Netflix will have to create original content to remain relevant in the streaming service sphere, it seems to have already begun its journey towards Netflix-branded content. Recently, Netflix announced its purchase of the comic book label Millarworld. A strategy that rivals that of Disney's decision to purchase the comic book label Marvel for $4 billion in 2009, Netflix's new purchase will allow it to both create and own new superhero films. Netflix Chief Content Officer Ted Sarandos expanded on the details of the acquisition, stating "Netflix is the future and Millarworld couldn't have a better home," he said. "We look forward to creating new Netflix originals from several existing franchises as well as new super-hero, anti-hero, fantasy, sci-fi and horror stories [Millarworld] will continue to create and publish."