Wall Street unconvinced parents will follow Disney to new streaming service
Shares of the Walt Disney Company plunged Wednesday to their worst value in more than eight months after news the legendary entertainment studio would end its partnership with streaming service Netflix.
Disney’s stock dipped nearly 4 percent to close at $102.83.
The company announced close of markets markets Tuesday it would pull all of its movies from Netflix in 2019 and launch its own streaming service.
Disney acquired a 75 percent majority stake in streaming infrastructure firm BAMTech.
“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.
It will use BAMTech to launch a new platform for its sports network, ESPN, next year. In 2019, all Disney and Pixar films, including the upcoming Toy Story 4, live-action The Lion King and the sequel to Frozen, will only be available to stream via Disney’s yet-be-named service.
Investors may be concerned consumers will stay with Netflix. However, parents who spoke to Anadolu Agency seemed mixed on making the switch.
“I would be disappointed if they pulled their movies,” said Amanda Plassmeyer, mother of a 2-year-old girl. “We just don’t have the extra money to pay for both, but there are so few movies our daughter can watch on Netflix that I would be more inclined to pay for Disney.”
On a call with investors Tuesday, Iger said Disney is considering launching separate streaming services for Marvel and Star Wars, two of its most valuable franchises.
For Therese Finn, the mother of a 14-year-old girl and a boy, 12, paying for traditional cable is more attractive than buying a portfolio of streaming services, especially as the market becomes more congested.
“I don’t have Netflix,” Finn said. “That being said, if I did, I don’t think I would add Disney because our cable provider shows Disney, Pixar, Star Wars and Marvel movies all the time.”