Disney Plans To End Netflix Contracts And Launch Its Own Streaming Services

Disney says that when current contracts expire it will no longer offer new movies and TV shows to Netflix. It's also launching two new streaming services — one for movies and TV and the other an ESPN sports stream. Content creators such as Disney are increasingly questioning their relationships with streaming services like Netflix, as cord cutters erode profits for cable channels.

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There's a new summer blockbuster, a clash of titans. Two entertainment giants that have been allies are planning to go head to head. The Walt Disney Company says starting in 2019 it will stop making its new movies and TV shows available on Netflix. It's going to set up its own streaming services, one for entertainment and one for sports. NPR media correspondent David Folkenflik joins us now from our studios in New York to help break all this down. And, David, first just tell us - what is Disney planning to do?

DAVID FOLKENFLIK, BYLINE: Well, so starting by calendar year 2019, Disney says it'll be pulling movies and TV shows from two of its main movie and entertainment lines - that's Walt Disney, you know, folks that created "Frozen" and "Moana," as well as Pixar, the home of "Toy Story," "Toy Story 2," "Toy Story" someday 27 - and be pulling it from Netflix. And that'll be an app for TV and movies. And there'll be a separate app for its incredibly dominant sports brand, ESPN, where it promises an additional tens of thousands of hours of programming, much of which won't be available on its shows. And they'll be pulling stuff from, you know, several networks as well.

CORNISH: Is this also going include the ABC programming on TV?

FOLKENFLIK: That's right. They'll be television programs as well as films.

CORNISH: So why are they making this move now?

FOLKENFLIK: Well, there's increasing concern, of course, about cable cutting and the question of erosion. For example, ESPN is a giant in cable. It gets a lot of revenue for ESPN. But advertising has been down, and there's been erosion of how many households are having it. Disney Chairman Robert Iger spoke to investment analysts yesterday. He said that there were affirmative reasons to do this as well.

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ROBERT IGER: One of the reasons that we're doing this is because of the trends that we're seeing. But another reason that we're doing it is because of the strength of the brand and the opportunity that this technology and the consumer trends that the technology has created are providing. It's not just a defensive move. It's an offensive move.

FOLKENFLIK: So Iger is saying there they want to be closer to their consumers. They want to cut out the middlemen to get the data, but also get their revenues, figure out what works for them. And, you know, they may someday, they say, add the films from Lucasfilm, which are the "Star Wars" franchise, as well as their Marvel Comics films. They're trying to figure out how much of the audience they can keep and retain the revenue from directly themselves.

CORNISH: But speak to the larger trend. I mean, this can't be good for Netflix as well.

FOLKENFLIK: Well, it's been kind of amazing. You've seen both Netflix share price go down since that announcement and Disney prices go down. There is this tussle for control over content. You know, you think of the major cable companies now and they've sort of seemed to have a hold on this until the streamers came along. Netflix and Amazon provided a counterbalance to those things. And now you're seeing almost everybody get into both the delivery and the content creation side of things. You're seeing this tussle over who's going to really control the consumer both in the creation of content that they want and the delivery of that content.

CORNISH: Finally, any risk for Disney here?

FOLKENFLIK: I mean, Disney, strictly speaking, isn't a technology company, although it's relied heavily on technology for all it's done and will be more of a technology company in the future. In fact, it just invested a lot of money in a company that'll help it stream a lot of these services. But if Disney can't execute the technology, if it's not at a price point that's valid, and if they don't have enough content that people want to pay separately for this service, then you could see them be as flummoxed on this end as they have been by the erosion of the support on cable for, you know, things that have been so profitable, so important to their company in years past such as ESPN.

CORNISH: That's NPR's David Folkenflik. Thanks for explaining it.

FOLKENFLIK: You bet.

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