×
You will be redirected back to your article in seconds

Disney to End Netflix Deal, Sets Launch of ESPN and Disney-Branded Streaming Services

Disney to acquire majority stake in BAMTech from Major League Baseball for additional $1.58 billion

Disney is ending its distribution agreement with Netflix for new movie releases, while it’s also buying majority ownership of BAMTech — the streaming-video company founded by Major League Baseball — in a $1.58 billion deal.

The moves set a clear course for the media giant to launch Netflix-style direct-to-consumer internet services from ESPN and Disney. Disney said will end its distribution agreement with Netflix for subscription streaming of new movie releases, beginning with the 2019 theatrical slate.

“This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the company, one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands,” Disney CEO Bob Iger said in a statement. The company announced the plans as part of reporting fiscal Q3 earnings, which included a 3% revenue decline in its cable networks group.

The media conglomerate said it will launch an ESPN-branded multi-sport video streaming service in early 2018, followed by a new Disney-branded direct-to-consumer streaming service in 2019. Those will be powered by BAMTech, in which Disney will hold a 75% stake. 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 didn’t provide details on what the new over-the-top services are expected to cost.

The new Disney-branded service will become the exclusive home in the U.S. for subscription VOD access to new releases from Disney and Pixar beginning with the 2019 theatrical slate. Those are set to include “Toy Story 4,” the sequel to “Frozen,” and “The Lion King” from Disney’s live-action division.

Disney hasn’t yet determined streaming distribution for films from its Marvel Entertainment and Lucasfilm studios. Those movies could be licensed to a third-party subscription VOD service or stay in-house (either on their own dedicated service, or on the Disney-branded service planned for 2019).

In addition, Disney said it expects to make a “significant investment” in an annual slate of original movies, TV shows, short-form content and other Disney-branded exclusives for the service. The subscription service also will feature library content, including Disney and Pixar movies and shows from Disney Channel, Disney Junior and Disney XD.

The revised plans for the ESPN-branded multi-sport service are much broader than the over-the-top play Disney originally had slotted for the end of 2016. The new service will include about 10,000 live games from leagues including Major League Baseball, the National Hockey League and Major League Soccer. It also will include collegiate sports and Grand Slam tennis coverage. Noticeably missing from the lineup in the forthcoming ESPN OTT service are NFL and NBA games — the two most popular pro sports in the U.S.

“For many sports fans, this app will become the premier digital destination for all their sports content,” Disney said in its announcement.

Even with the launch of ESPN’s subscription sports service, Disney said OTT packages for individual sports will also be available for purchase, including MLB.TV, NHL.TV and MLS Live. The new service will be based on an “enhanced version” of the current ESPN app, which will continue to offer pay-TV subscribers access the ESPN programming on an authenticated basis.

Under terms of the deal for BAMTech, Disney will pay $1.58 billion to acquire an additional 42% stake in the New York-based streaming and video infrastructure company from MLB Advanced Media, the interactive media and internet unit of Major League Baseball. A year ago, Disney acquired a 33% stake in BAMTech for $1 billion under an agreement that included an option to acquire a majority stake.

Disney’s acquisition of a controlling stake gives BAMTech a valuation of $3.75 billion. MLBAM will retain a 15% stake in the company.

“We’re very proud of the content distribution innovations driven by MLBAM and BAMTech over the past 15 years,” MLB commissioner Rob Manfred commented. “Major League Baseball will continue to work with Disney and ESPN to further grow BAMTech as it breaks new ground in technologies for consumers to access entertainment and sports programming.”

The BAMTech transaction is subject to regulatory approval. Once the deal closes, Iger will serve as chairman; MLBAM and NHL will continue as minority stakeholders in BAMTech, with seats on the board.

BAMTech CEO Michael Paull — a former senior video exec at Amazon who joined earlier this year — will report to Kevin Mayer, Disney’s senior executive VP and chief strategy officer. Disney said that John Skipper, ESPN president and co-chairman of Disney Media Networks, will manage the new ESPN-branded service.

“This is an exciting validation of our team, its achievements and the customer-centric platform it’s built,” Paull said in a statement. “Yet, we’ve merely scratched the surface of what can be accomplished in a future where we combine Disney and ESPN’s world-class [intellectual property] and our proprietary direct-to-consumer ecosystem.”

Currently, BAMTech designs, develops, and delivers direct-to-consumer streaming services for partners including HBO Now, MLB, NHL, MLB, PGA Tour, WWE Network, and Riot Games’ “League of Legends.” Through a partnership with Discovery Networks, BAMTech Europe will provide technology services on the continent, including Eurosport’s digital products.

Popular on Variety

More Digital

  • MINDHUNTER

    Netflix's Podcast Slate 'Deepens' Space Around Original Content, Programmers Say

    It should come as no surprise that, in its quest to become a full-blown entertainment ecosystem, Netflix has built a roster of podcast programming to complement its scores or original series and films. The programs recruit top talent and hosts to hang out and talk about the streaming giant’s TV and film content. It’s a [...]

  • Netflix-logo-N-icon

    Netflix Is Testing Human-Curated 'Collections'

    Netflix, a company powered by the strategic use of data, relies on artificial intelligence to suggest new content that its streaming customers are likely to be interested in. Now it’s looking to potentially add a human touch: The company has launched a limited-scale test of “Collections,” a new feature that presents groups of movies and [...]

  • wolves in the walls emmy

    Neil Gaiman VR Experience 'Wolves in the Walls' Wins Primetime Emmy

    “Wolves in the Walls,” the virtual reality (VR) experience based on Neil Gaiman’s children’s book by the same name, has been awarded with a Primetime Emmy for outstanding innovation in interactive media. The experience has been produced by San Francisco-based immersive entertainment startup Fable, which puts a big effort on making the viewer a participating [...]

  • The Void San Francisco

    The Void Teams Up With Sony Pictures for New Location-Based VR Experience

    James Murdoch-backed virtual reality (VR) startup The Void has teamed up with Sony Pictures Virtual reality to produce a new location-based VR experience, according to Curtis Hickman, the startup’s chief creative officer. Hickman revealed the partnership in a conversation with Variety this week, during which he also outlined plans to bring more original IP to [...]

  • US President Donald J. Trump speaks

    Apple Stock Down 4.6% After Trump ‘Orders’ Companies to Leave China

    Apple’s share price was down around 4.6% Friday at the close of the market, to $202.64 per share, after President Trump took to Twitter to “order” U.S. companies to leave China. The slide came amid a market-wide sell-off, with the NASDAQ sliding 3%, and the Dow dropping 623 points. Trump’s edict was a response to [...]

  • Former head of CAA China Peter

    Peter Loehr to Spearhead Asia Expansion of Genies Avatar Venture (EXCLUSIVE)

    Peter Loehr, the former head of CAA in China, and seasoned music executive John Possman have been tapped by digital avatar company Genies to lead its expansion into Asia. The company’s proprietary avatar technology allows users to express ideas, thoughts and feelings in a different way from text, audio and video. Within the app and [...]

More From Our Brands

Access exclusive content