The Walt Disney Company announced its bold vision for the future of streaming video on Tuesday.
First, the studio behind Star Wars, Marvel, and Pixar will pull its new movies from competitors like Netflix. Second, it will introduce two video streaming services for consumers to be built on the back of BAMTech, the streaming video company that Major League Baseball developed to deliver its games online.
Before today, Disney owned 33% of BAMTech. However, in today’s announcement, Disney revealed that it will pay $1.58 billion to acquire an additional 42% of BAMTech, making Disney the majority owner. Disney will then use BAMTech to develop an ESPN-branded sports streaming service that will premiere in 2018, as well as a Disney-branded offering that will launch in 2019.
“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,” Robert Iger, Disney’s chief executive, said in a statement. “This acquisition and the launch of our direct-to-consumer services mark an entirely new growth strategy for the company.”
BAMTech, also known as Major League Baseball Advanced Media, has existed since 2000, when the league first introduced its MLB.tv subscription streaming service. As the technology matured, it attracted the attention of partners outside the diamond.
For instance, BAMTech served as the digital distribution backbone for HBO’s first streaming app HBO Go, which launched in 2010. In 2015, the National Hockey League signed the baseball streaming service to put its on-ice activities on the air, digitally. And in 2016, Disney put down $1 billion for a 33% ownership share, a deal that included an option for the entertainment giant to take a majority stake over several years. “Today’s announcement marks an acceleration of that timetable,” notes Disney’s statement.
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No doubt also accelerating Disney’s plans are the myriad streaming services that are coming to market. Over the past year, competitors from AT&T’s (T) DirectTV Now to Dish Network’s (DISH) Sling TV have grabbed market share, prompted cable subscribers to increasingly cut the cord, and started to reduce cable television’s clout. That shift has also hurt big name networks like ESPN and The Disney Channel.
But with a planned BAMTech-backed, sport-centric, streaming package featuring 10,000 live games and events annually, Disney is betting ESPN can remain a household name. And pairing the offering with add-on subscriptions from MLB, the NHL, Major League Soccer, Grand Slam tennis, and college sports, is a nice revenue stream on the side. Likewise, on the Disney side, keeping a tighter leash on the company’s properties (and maybe even returning some to the Disney vault) will channel revenue away from competitors like Netflix and Amazon, and into its own coffers instead.
As it stands, the streaming video game hasn’t yet approached the seventh inning stretch. But when it’s over, today’s move by Disney could be the winning run.
