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With Disney’s Move to Streaming, a New Era Begins

With Disney’s Move to Streaming, a New Era Begins

LOS ANGELES — Disney set off a sonic boom in Hollywood by unveiling plans to start two Netflix-style services: For the first time in the streaming age, the world’s largest media company had decided that embracing a new business model was more important than clinging to its existing one.

Disney’s decision to better align itself with consumer trends — deemed “a rare and impressive pivot” by RBC Capital Markets — instantly reverberated through the entertainment industry. Disney’s cable channels, which include ESPN, have long been seen as the reason many viewers were refraining from cutting the cord entirely. If Disney was going all in on streaming, the impact would be felt by almost every television company and cable operator.

As part of its announcement on Tuesday, Disney said that it would spend heavily on original programming for its entertainment streaming service and pull future Disney and Pixar movies from Netflix. That sent Netflix shares downward. The question seemed to be, how would Netflix, even with its head start in terms of audience and reach, manage without the mighty mouse? And would Disney’s plunge into streaming encourage the likes of Discovery and Viacom to do the same, intensifying competition?

And would viewers who want to eschew traditional cable subscriptions eventually find themselves overwhelmed by the sheer number of streaming services they would need to cobble together to watch what they wanted to watch?

On Wednesday, as analysts and investors scratched for answers, few firm ones emerged. In a research report, Doug Creutz, an analyst at Cowen and Company, summed up Disney’s streaming plans, especially for movies and television, as “aggressively” pushing “the traditional content business into terra incognita.”

Disney investors may also be worried about the enormous spending it will take to build two streaming services. Some might have been underwhelmed by the company’s plans or might have thought that the decision came much too late.

While a few ardent Disney critics held that view, most analysts applauded the company’s move.

“What Disney is doing is a really big deal in terms of trying new things, and I don’t think it even has answers to some of these questions, including what the services will cost,” said Michael Vorhaus, president of Magid Advisors, a media and digital video consultancy. “But it’s clearly not the end of linear television. It’s not the end of Netflix.”

Read more from The New York Times here. 

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