On Tuesday Disney announced that as of 2019 it will pull its Disney and Pixar movies from Netflix and start its own streaming service. This move is not surprising. In fall 2015, Disney launched the first multimedia subscription service in the U.K. called DisneyLife, which includes TV shows, movies, books, and music.

I then argued that, while the initial launch of DisneyLife was limited to Europe, it was inevitable that this would eventually be a more ubiquitous, global platform.

Well, the time has come and Netflix viewers (especially kids!) should beware; starting in 2019 there will be no middleman. Netflix will no longer be streaming Disney and Pixar titles and consumers will have to go directly to the source, a Disney streaming service. Marvel Netflix shows will continue. Disney also announced that it will launch an ESPN video streaming service in early 2018, including MLB, NHL and MLS content. So this is not just one more experiment, it is a strategic move towards direct-to-consumer digital distribution. Will Disney succeed?

The Precedent

By starting its own streaming service, Disney will try to command its place in an ever growing digital media space. It is a similar phenomenon observed in other industries, where top players realize that they should have a strong presence in digital distribution, and decide to “reintermediate” the market with their own direct-to-consumer service. The problem is, they do so late in the digital transformation, only after their cash cow business with traditionally high margins and a captive market starts to falter.

This case is no different. Disney has been struggling lately, with lower profits and flat revenues in the last quarter, driven by five straight quarterly decreases in operating income from the unit that houses ESPN. To make things worse, during Disney’s Netflix distribution experiment, the streaming space has become saturated with direct-to-consumer services. It all started a little more than two years ago when HBO launched its own stream service HBO Now, opening the floodgatesfor many other mainstream top players to adopt direct distribution.

 

More from Forbes

Disney To Stream Its Own Movies Without Netflix: Will It Succeed?

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>