As Netflix moves further towards original content Disney decides to stream it alone

Disney has announced the acquisition of a majority stake in video streaming provider BAMTech in a step towards streaming its own content independently.

Having bought a 33% stake a year ago Disney is forking out $1.58 billion for an extra 42%, thus giving it majority ownership and effective control. BAMTech was created to stream Major League Baseball but was spun off and now deals with other sports as well as HBO Now. The latter task is currently in the spotlight with the latest series of Game of Thrones receiving rave reviews.

“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 Robert Iger, Chairman and CEO of Disney.

“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.”

Those direct-to-consumer services will be comprised of its ESPN sports channels starting a streaming service in 2018 and a separate streaming service for Disney-branded (including Pixar) content in 2019. Disney has included an option to acquire more of BAMTech when it bought the first chunk but it hadn’t been expected to exercise it so soon.

Disney’s move is indicative of a broader land-grab for control of the relationship with the consumer by media, tech and telco companies. It may also signify the peak of the powers of Netflix as a distributor, something it seems to be anticipating with the acquisition of Millarworld – its first of this type – a comic publisher responsible for titles such as Kick-Ass and Kingsman.

Netflix is already very proactive in terms of original content and has licensed some Marvel (owned by Disney) properties such as Daredevil but this is presumably expensive. By dropping a reported $50-$100 million on Millarworld Netflix is hoping to jump on the superhero bandwagon independently.

“As creator and re-inventor of some of the most memorable stories and characters in recent history, ranging from Marvel’s The Avengers to Millarworld’s Kick-Ass, Kingsman, Wanted and Reborn franchises, Mark is as close as you can get to a modern day Stan Lee,” said Netflix Chief Content Officer Ted Sarandos. “We can’t wait to harness the creative power of Millarworld to Netflix and start a new era in global storytelling.

“Mark has created a next-generation comics universe, full of indelible characters living in situations people around the world can identify easily with,” added Sarandos. “We look forward to creating new Netflix Originals from several existing franchises as well as new super-hero, anti-hero, fantasy, sci-fi and horror stories Mark and his team will continue to create and publish.”

“This is only the third time in history a major comic book company has been purchased at this level,” said Millarworld Founder Mark Millar. “I’m so in love with what Netflix is doing and excited by their plans. Netflix is the future and Millarworld couldn’t have a better home.”

There have been M&A rumours regarding Disney and Netflix for years but these developments seem in indicate they’ve decided to follow other paths. Both companies’ share prices fell by around 4% on the news but in the case of Disney that could be due to other information revealed in its quarterlies and Netflix shares jumped around 20% after its latest quarterlies, so those movements may not be significant.

Telcos, especially in the US, are very keen to get into the content game but these moves serve as a reminder of what dilettantes they are compared to companies for which content and streaming are their core competence. We wouldn’t be surprised to see a fair bit more M&A in this areas before long.