Why Disney Ended Its Netflix Deal

Less than a year after Netflix became the exclusive streaming platform for Disney movies, plans have changed.

Insideout

Less than a year after Netflix became the exclusive streaming platform for Disney movies, plans have changed.

Back in May 2016, Disney announced that Netflix would become the sole streaming provider of its films, including Marvel, Lucasfilm, and Pixar content. Not its full library of titles, but all new releases, would be available on the subscription-based service starting with Captain America: Civil War. The deal went into effect last September. Not even a year later, it’s over.

This week, Disney announced plans to remove their films from Netflix with the intention of starting their own streaming platform. All titles currently on Netflix will be available until the end of 2018, and all Marvel shows, including non-Netflix originals, will remain beyond that time, as well. Everything else will be goners starting in 2019.

That’s when Disney’s new streaming service will launch, complimenting the ESPN streaming service debut in 2018. Starting with films slated for release in 2019 (that’d include Frozen 2, Toy Story 4Captain Marvel, the live-action The Lion King and Dumbo, and Star Wars IX), all future Disney titles will be exclusive to this platform. The service will also offer exclusive shows and movies specifically for the service, as well.

This change comes as a shock, though Disney CEO Bob Iger stressed to CNBC that this did not occur because of a falling out with Netflix. So that raises the question of what did cause this decision. Simple answer: the change in media consumption.

Netflix has made it clear that the general masses want their content on a digital platform compared to more traditional sources, like cable or theatrical releases. In the past three months alone, 1.07 million more people subscribed to Netflix. Overall, the service has 104 million subscribers. In comparison, the big five cable companies lost a combined total of 527,000 subscribers over the same period. The industry is changing accordingly, focusing more on streaming to appeal to “cord cutters.”

“Cutting the cord” has become an option many consumers around the world are choosing. So when a network notices this, they see that they can make more money by cutting out the middle man and opening their own streaming service. CBS and HBO have both done this, creating their own streaming services and offering it directly to customers instead of making a deal with Hulu or Netflix. CBS has even gone as far as creating their own original content exclusive to the platform, such as Star Trek: Discovery.

Disney has an advantage over those two networks, however, as it not only has a massive television catalog to offer consumers but a massive film library, too. This streaming platform can offer content from ABC, Freeform, Disney Channel, Disney Junior, and Disney XD next to films from Marvel, Lucasfilm, and Pixar, as well as Walt Disney Studios, of course. By having a grasp on a large portion of popular entertainment, Disney has the ability to make a streaming platform that could really give Netflix a run for its money.

When looking at the numbers, it’s clear this decision is the most profitable option for Disney. By creating their own streaming service for consumers to subscribe to, they eliminate the need for a middle man like Netflix. They can stream their own content and earn an even larger profit.

“This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the Company,” Iger says in his official statement, “one that takes advantage of the incredible opportunity that changing technology provides us to leverage the strength of our great brands.”

In this day and age, that’s really the best business choice.

Usually works best after her third Red Bull of the day. Lover of film, insomniatic dreamer.