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.

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SOURCE: Variety, Todd Spangler

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