Walt Disney Co (NYSE:DIS) released its third quarter earnings on Tuesday and saw its earnings per share drop to $1.58 for the quarter from $1.62 a year ago. However, earnings still beat estimates of $1.55.
But the big news in the release wasn’t about earnings, it was that Disney was going to remove its movies from Netflix, Inc. (NASDAQ:NFLX) and would launch its own streaming service in 2019. This is big news to both companies and will definitely put a dent into Netflix’s subscriber base. However, Netflix will still have Disney movies available until the end of 2018.
Similarly, the company that owns ESPN is also going to launch a video streaming service early next year as well. Disney currently uses BAMTech to stream the content, which it currently owns a third of but plans to buy a majority stake in.
It will be a battle of the heavyweights and if Disney could make an attractive package that could include live sports along with its Disney programming it could be the ultimate solution to cord cutters who often see sports as the missing piece and ultimate reason why they hang on to their cable subscription.
Netflix has over a year before it has to go head to head with Disney but it is inevitable that it will lose domestic subscribers due to this. It’s unclear how quickly Disney will expand into international markets and until then Netflix will be able to focus on that subscriber growth, but this will certainly cut a big piece out of Netflix’s pie and poses a formidable threat to the company’s future earnings.
