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Netflix faces a new challenge as Disney strikes back with its own streaming service

Netflix faces a new challenge as Disney strikes back with its own streaming service

With its more than 100 million subscribers around the world, Netflix has built a business model that not only altered the way TV series and movies are consumed, but threatens the very foundation of the entertainment industry.

On Tuesday, Hollywood’s biggest studio decided to strike back, creating a new and potentially serious challenge to the digital streaming giant.

Walt Disney Co. said it will end its distribution deal with Netflix and launch its own streaming service in 2019. The move will deprive Netflix subscribers of numerous Disney movies, including such recent hits as “Zootopia,” “Moana” and “The Jungle Book.”

A spokesman for Netflix said its domestic subscribers will continue to have access to Disney movies on the service through the end of 2019, including all new films that are shown theatrically through the end of 2018.

“We continue to do business with the Walt Disney Co. globally on many fronts,” Netflix said. The company said its relationship with Marvel TV, which is owned by Disney, will continue; that has yielded Marvel series on Netflix such as “Luke Cage” and the upcoming “The Defenders.”

Disney’s announcement spooked Netflix investors. Shares of the Los Gatos-based company dropped nearly 5% in after-hours trading Tuesday before rebounding slightly. The stock had closed the day down 1.6% at $178.36.

Industry experts said the sell-off might be premature, but they nonetheless sounded a cautionary note about Netflix.

“Losing just the Disney content isn’t the end of the world,” said Michael Vorhaus, president of Magid Advisors, a media and digital video industry consultant. But if other studios follow suit by pulling out of Netflix to make deals with competing streaming services, “that’s not good.”


Read more from The Los Angeles Times here.

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