Disney to Include Star Wars, Marvel Movies on New Streaming Service -- 2nd Update
September 07 2017 - 2:50PM
Dow Jones News
By Ben Fritz
Walt Disney Co. intends to offer its Marvel and "Star Wars"
properties through the subscription video service it is planning to
launch in 2019, rather than renewing a deal with Netflix Inc.,
according to Chief Executive Robert Iger.
Disney said last month it would launch its own on-demand service
in late 2019, on which it would offer animated and live-action
family films that currently stream on Netflix after they run in
theaters and are sold on DVD and in digital stores such as Apple
Inc.'s iTunes.
However, Mr. Iger said at the time Disney wasn't certain whether
the company would include Marvel and "Star Wars" movies on its own
service or continue to license them to Netflix.
In deciding to retain the rights to two of its biggest
franchises, including superhero movies such as "Avengers" and the
annual "Star Wars" sequels and spinoffs, Disney is giving up tens
of millions of dollars per movie it currently receives from
Netflix. However, it will bolster the amount of premium content
available on its own digital service and thus, Mr. Iger is betting,
its appeal to consumers.
"We're going to launch big and we're going to launch hot," Mr.
Iger said of the digital service, speaking at a media-business
conference on Thursday.
Mr. Iger also said Disney's earnings per share for its fiscal
2017, which ends Sept. 30, would be roughly in line with those of
fiscal 2016. Analysts polled by Thomson Reuters had been expecting
Disney's earnings to rise 2.6%, to $5.88 a share, compared with
$5.73 last fiscal year.
Among the factors Mr. Iger cited were higher costs for National
Basketball Association rights; the lower performance of last
December's "Rogue One: A Star Wars Story" at the box office and in
consumer-product sales compared with December 2015's "Star Wars:
The Force Awakens"; as well as the looming impact of Hurricane
Irma. Disney already has canceled three cruise-ship itineraries and
seen cancellations at Walt Disney World in Orlando, Fla., he
said.
Separately, Comcast Corp. warned that its video subscribers will
decline between 100,000 and 150,000 in the third quarter because of
aggressive competition and adverse hurricane impact. The day's news
put pressure on media stocks. In midday trading Thursday, Disney
shares were down about 4%, while Comcast was off 5% and Viacom Inc.
and 21st Century Fox Inc. were both down about 3%.
For Netflix, Disney's decision to hold on to rights to "Star
Wars" and Marvel movies will add to the pressure for it to create
appealing original content of its own to replace some of the
high-profile franchise films it will lose starting in 2019.
A Netflix spokesman declined to comment.
In addition to all of the movies Disney produces for theaters,
typically around 10 a year, the company will produce four or five
lower-budget movies exclusively for its new digital service, Mr.
Iger said at the investor conference organized by Bank of America
Corp.
The company also will make four or five original series and
three or four "television movies" of the type that currently run on
its Disney Channel, Mr. Iger added.
The service will be launched in the U.S. in late 2019 as movies
that previously would have been on Netflix become available, Mr.
Iger said, though it could be launched earlier in other
countries.
Disney is just beginning work on the digital service, which will
be offered directly to consumers over the internet, and has yet to
announce how it will be priced. Mr. Iger said the company will
share details on how much it will spend on the service later.
As a part of the strategy, however, Disney last month said it
would spend $1.58 billion to acquire majority control of
streaming-technology company BAMTech.
Disney next year also will launch a direct-to-consumer ESPN
sports service. Mr. Iger announced no significant new details about
it Thursday, reiterating that it will include about 10,000 annual
events in sports such as baseball and hockey that currently don't
run on live television and that it will act as a hub allowing fans
to subscribe to other specific sports leagues or events.
Successfully launching the new digital services is one of Mr.
Iger's two chief priorities in the remaining two years before his
planned retirement in 2019, he said, along with lining up a
successor to his own job.
Write to Ben Fritz at ben.fritz@wsj.com
(END) Dow Jones Newswires
September 07, 2017 15:35 ET (19:35 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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