Just one year into its streaming deal with Netflix, The Walt Disney Company is ending the agreement. Disney announced on Tuesday that they have acquired a majority stake in BAMTech LLC in an effort to combat low cable earnings and join the rapidly growing streaming business. The multi-national entertainment entity purchased an additional 42% for an estimated $1.58 billion of the streaming technology company. They previously owned 33% of BAMTech.
The move, announced in a press release, is one all parties involved seem eager to get started on. Disney Chairman and CEO Bob Iger told analysts Tuesday they don’t see it as much as a defensive move following cable woes, but more of an offensive move. ““It’s high time we got in this business,” said Iger. “We’ve got this unbelievably passionate base of Disney consumers worldwide that we’ve never had the opportunity to connect with directly other than through the parks.”
Beginning in 2019, Disney’s theatrical releases will be found on the new service. The direct to consumer subscription format will become the exclusive streaming and video-on-demand home for all of the studios films. Disney will continue to stream theatrical titles on Netflix, but the streaming giant will miss out on title such as Toy Story 4, a live action remake of The Lion King, and a Frozen sequel. All of those films are slated for a 2019 theatrical release. Disney also announced it will be distributing an ESPN streaming entity as well.
With the additional shares, Disney now holds a 75% majority stake in BAMTech. Founded by Major League Baseball’s Advanced Media (MLBAM), BAMTech handles streaming for MLB and other entities. The company provides streaming technology to clients such as HBO and the other major professional sports leagues.
“The media landscape is increasingly defined by direct relationships between content creators and consumers, and our control of BAMTech’s full array of innovative technology will give us the power to forge those connections, along with the flexibility to quickly adapt to shifts in the market,” said Iger.
BAMTech CEO Michael Paull says he finds the deal to be validation of his company’s quality. “We’ve merely scratched the surface of what can be accomplished in a future where we combine Disney and ESPN’s world-class IP and our proprietary direct-to-consumer ecosystem,” says Paull.
While Iger said Disney will not experiment with day-and-date theatrical releases on the streaming service, a subscription will give fans exclusive access to nearly all things Disney. In addition to being the pay TV home of Disney theatrical releases, the service will also feature a massive amount of content from Disney Channel, Disney Junior and Disney XD television programming.
It’s a major strategic shift for the company who’s Q3 earnings were hampered only by the aforementioned low earnings in its cable sector.
“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,” said Iger.
MLB Commissioner Rob Manfred said “We’re very proud of the content distribution innovations driven by MLBAM and BAMTech over the past 15 years.” Manfred also added his desire to continue to work with Disney to improve the company. MLB will still hold a minority stake in BAMTech even with Iger taking up the mantle of chair upon approval of the deal. The change in majority ownership is still subject to regulatory approval.
Iger also noted Disney is unsure of what they will do with Marvel and Lucasfilm properties going forward. They may choose to stick with third-party deals for the time being but Iger didn’t count out adding them to the service.
Iger concluded by also mentioning that Disney will begin to invest in more original programming that will be found on the site saying, “We’ve already begun the development process at Disney Channel and at the studio for original TV series and original movies for this service,” he said. “This will represent a larger investment in Disney-branded intellectual property.”
Disney has not disclosed pricing or any related information relating to the service at this time.