After dropping more than 1.6% during regular trading, shares of Netflix (NFLX - Free Report) slumped another 3.5% in after-hours on Tuesday following the announcement that Disney (DIS - Free Report) plans to pull its movies from the platform.
Alongside its third-quarter earnings report, media behemoth Disney detailed its plans to launch an ESPN streaming service next year and a direct-to-consumer offering in 2019. The company also said that it is upping its stake in BAMTech to a majority position for an additional $1.58 billion.
“Today we announced a strategic shift in the way we distribute our content. The media landscape is increasingly defined by direct relationships between content creators and consumers, and our control of BAMTech’s full array of innovative technology will give us the power to forge those connections, along with the flexibility to quickly adapt to shifts in the market,” said Disney CEO Bog Iger.
“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.”
Iger told CNBC’s Julia Boorstin that his company had a “good relationship” with Netflix, but ultimately Disney decided to exercise its option to remove its content from the platform. According to CNBC, the company will remove Marvel and Disney films. Initial reports are unclear on what will happen to Netflix’s original Marvel-branded shows.
The BAMTech acquisition will help power Disney’s new services, and Iger told CNBC that Disney plans to make a “significant investment” in exclusive movies and shows for the platforms.
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