Shares of Netflix (NFLX) were clown-raped at the open to the tune of 4% in after-hours trading Tuesday, only to recover throughout the morning after the Walt Disney Company (DIS) announced they would be pulling all content from the platform in order to launch their own streaming service in 2019.
Of note, NFLX is nearly oversold in Exodus, and has outstanding 10-day returns with an average 13.94% return 9 out of the last 10 times the OS indicator has triggered.
Disney announced they were ditching Netflix during Tuesday’s earnings call, along with a disastrous 9 percent drop in quarterly profits to $2.37bn and stagnant revenues of $14.2bn compared with the same period in 2016 – sending the stock down nearly 4 percent in after hours trade on Tuesday.
Disney’s new plans include taking majority ownership in video streaming company BAMTech for $1.58bn, increasing it’s stake from 33 percent to 75 percent, as well as an increased investment in original content for both movies and TV shows.
No pricing was announced, however Disney plans to expand the strategy globally after the U.S. launch.
Offensive Move
Disney CEO Robert Iger said the streaming services “mark the beginning of what will be an entirely new growth strategy for the company,” adding “it’s not just a defensive move, it’s an offensive move.”
With the digital push, Disney is trying to insert itself into territory currently claimed by Amazon and Netflix, which have won audiences with a combination of original programmes available on-demand and a business model focused on monthly subscriptions instead of advertising.
Mr Iger said making Disney and ESPN content available on standalone sites and apps is a better bet in the long run than continuing to rely on cable television, movie theatres and licensing agreements to distribute its work.
Disney said its distribution deal with Netflix for new Disney and Pixar movies would end in 2019, with discussions ongoing about the fate of Star Wars and Marvel franchises. –BBC Business
more competition and options is always good for consumers
Netflix produces some awful, leftist SJW content. I wonder if Disney has any affect upon this, and whether their content agenda will change following this announcement.