What Disney’s streaming service means for Netflix subscribers

For a while now, Disney has been publicly discussing plans to take its movies off of Netflix and use them to launch a streaming service of its own. Disney chairman and CEO Bob Iger reiterated the company’s strategy during an investor call yesterday, confirming that films from the Disney library won’t leave Netflix anytime soon — and that the company is still figuring out how to handle content from its pending acquisition of much of 21st Century Fox. Let’s sort out the ways in which this will affect your access to all this stuff.

Disney and Netflix signed their current agreement back in 2012, giving Netflix the exclusive U.S. rights to Disney films during what is known as the pay-TV window — a movie’s first availability on TV after it hits DVD, Blu-ray and digital home video platforms. The movies in question include content from Walt Disney Studios (e.g., Pirates of the Caribbean: Dead Men Tell No Tales), Disney Animation (Moana, Zootopia), Pixar (Finding Dory, Cars 3), Marvel Studios (Captain America: Civil War) and Lucasfilm (Rogue One: A Star Wars Story).

The deal did not take effect for new films until 2016, which is why Netflix currently offers 2017’s Guardians of the Galaxy Vol. 2 but not its 2014 predecessor, and 2016’s Rogue One but not 2015’s Star Wars: The Force Awakens. Disney and Netflix also signed a separate, simultaneous deal for catalog titles such as 1941’s Dumbo and 1998’s Mulan.

Image: Lucasfilm/Walt Disney Studios

All of that will change in the near future. Disney announced last August that it planned to end its licensing agreement with Netflix, and pull some of its content off the service, so it can launch its own streaming platform. Here’s what that means:

• Disney’s deal with Netflix will end up covering films released in theaters from 2016 through 2018, and a Netflix spokesperson told Polygon in August that the company will retain streaming rights to the movies in question through 2019. In other words, Netflix subscribers in the U.S. will still be able to stream films such as Rogue One until at least the beginning of 2020.
• Iger noted during the investor call that Netflix “will have rights to the films that were made in ’16, ’17, ’18 for quite a long period of time thereafter,” and said that Disney will also get a window to stream those movies itself during that time. The existing deal would cover recent theatrical releases such as Thor: Ragnarok and Star Wars: The Last Jedi, plus upcoming films like Black Panther and Incredibles 2.

• Everything from Disney that hits theaters in 2019 and beyond — whether from Disney itself, Lucasfilm, Marvel or Pixar — will appear on Disney’s own streaming service. Disney is targeting a launch in “late 2019,” and has not announced pricing, but Iger has suggested that it will be “substantially below” the $10.99 monthly cost of a Netflix subscription. (Scheduled 2019 movies from Disney include Captain Marvel and the untitled sequel to Avengers: Infinity War; Toy Story 4; Frozen 2; live-action adaptations of Aladdin, Dumbo, The Lion King and Mulan; and Star Wars: Episode IX.)
• Iger previously announced that Marvel and Star Wars films will be available exclusively on Disney’s streaming service, along with multiple television projects that are currently in development: a live-action Star Wars series, a Marvel show, a series based on Pixar’s Monsters Inc. franchise and a High School Musical show.

That doesn’t mean that Disney plans to make everything exclusive to its streaming platform in the future, whether that content is distributed by Disney-owned platforms or by third-party partners. Marvel Television’s five Defenders series will continue to stream on Netflix, and barring a precipitous drop in ratings, it’s hard to imagine Disney pulling Agents of SHIELD from ABC to put it on the streaming service. Iger noted yesterday that Disney’s streaming service won’t compete with Netflix in terms of the sheer number of titles available.

Disney also has a $52.4 billion acquisition of most of Fox’s film and television production and distribution businesses in the works. Where will that stuff go?

“We’ll talk at a later date about our intentions regarding the Fox studio output,” said Iger during the call, “but obviously, Hulu is a possibility in that regard.” The acquisition would give Disney 60 percent ownership of the streaming service, and it wouldn’t make sense for the company to make Fox’s content exclusive to the same streaming platform as Disney’s films. Iger previously suggested that Fox’s more adult-oriented fare may be better suited to Hulu; it’s easy to see a world in which the Disney streaming platform serves as the home for all-ages entertainment, while grown-up content from Disney and Fox lives on Hulu.

Whatever happens, the Fox acquisition holds a lot of potential and would give Disney a lot of options.

“It’s ultimately our intention — and this acquisition clearly will enable this even more — to create and to ultimately grow a global, direct-to-consumer business that will take advantage of the production output that the combined companies will have, whether it’s on the television side or on the network side,” said Iger.

20th Century Fox

Iger added that Disney hopes to expand its production capabilities for both film and television to support multiple platforms “and, in particular, direct-to-consumer businesses that we own.” After all, the Disney-branded service for films and TV shows is just one streaming platform that the company is working on.

Disney’s streaming service for sports, ESPN Plus, will go live this spring — Iger announced yesterday that it will cost $4.99 per month — and it will exist as an add-on within a completely overhauled ESPN app. Iger said ESPN Plus will feature “thousands of hours” of programming from leagues such as MLB, MLS and the NHL, and from more niche sports like tennis, boxing, golf, rugby and cricket. It will also offer the full ESPN Films library, including the celebrated 30 for 30 documentary series, and “high-quality original content” developed exclusively for the platform.

If everything works out according to Iger’s grand plan, Disney will be poised to control a massive chunk of the entertainment universe. But hey, at least we’ll still be able to watch Moana on Netflix for a couple more years.

Charlie Hall contributed to this report.