The Walt Disney Company (NYSE:DIS) is launching two Netflix-style streaming services in a bid to address the pressure on its television business. Disney reported a slight decline in revenue and a 9 percent drop in net income for its fiscal third quarter. For the quarter, the company reported profit totaling $2.37 billion, or $1.51 a share, compared with $2.6 billion or $1.59 a share, recorded a year earlier. On an adjusted basis, Disney had per-share earnings of $1.58. Analysts had expected $1.55.
Disney had revenue of $14.2 billion, down slightly from the previous year. ESPN was significantly affected. Operating income at Disney Media Networks, which includes ESPN, fell to $1.84 billion, a 22 percent decline. Traditional subscriptions declined 3.5 percent in the quarter, compared with a 2 percent decline in the year-ago period.
Robert A. Iger, Disney’s chief executive, said of the move to streaming, “I would characterize this as an extremely important, very, very significant strategic shift for us.” Disney declined to say how much subscriptions would cost. The two streaming services are still unnamed. According to reports, at least one of the new services will not have advertising.
One of the services is built around sports programming from ESPN and is scheduled to arrive early next year. It will include about 10,000 regional and national events in baseball, hockey, tennis, and college sports in its first year. Users will access the service through ESPN’s app once it has been upgraded. Those paying to receive ESPN via a cable or satellite provider can to access standard ESPN programming through the same app.
The other service will be based on Disney and Pixar movies and television shows. The service will have exclusive access to new Disney films, including a “Frozen” sequel, a live-action version of “The Lion King,” and “Toy Story 4.” The entertainment service will also include content from Disney Channel, Disney Junior and Disney XD. Disney says it is planning to invest in original movies and shows for the service
The separate entertainment-oriented streaming service will arrive in 2019. According to reports, Disney has yet not decided whether to include films from Marvel and Lucasfilm. Mr. Iger said, “There has been talk about launching a proprietary Marvel service and ‘Star Wars’ service.”
The services will be powered by BamTech, a technology company that handles direct-to-consumer video. Disney bought a 33 percent stake in BamTech a year ago for $1 billion. Mr. Iger recently announced that Disney was considering an option to spend $1.58 billion for an additional 42 percent share.