The media conglomerate said it will launch an ESPN-branded multi-sport video streaming service in early 2018, followed by a new Disney-branded direct-to-consumer streaming service in 2019, powered by BAMTech.
Because of these plans, some sources were claiming that Disney intends to own a bigger piece of the streaming services.
"We'll also be making a substantial investment in original movies, original television series, and short form content for this platform, produced by our studio, Disney Interactive and Disney Channel teams", said Iger.
Less than a year ago, Disney forged a movie streaming partnership with Netflix.
"Today we announced a strategic shift in the way we distribute our content". Raymond James analyst Justin Patterson said if Netflix survived the loss then, the company should be fine, having added much more content in the meantime. Iger said "there is no change from our side" when it comes to the TV licensing agreement.
Disney said its new services would be based on technology provided by video-streaming firm BAMTech, and announced it would pay US$1.58 billion to buy an additional 42 percent stake in that company, which it took a minority stake in previous year.
"While this will be a negative headline for Netflix, we expect the actual impact on the subscriber base to be minimal", wrote Piper Jaffray analyst Michael Olson in a note to investors.
Disney and ESPN are walking a bit of a tightrope here, because they have to balance the legacy TV business with this new direct to consumer streaming OTT model during this transitional phase. (The existing Disney Movies Anywhere only lets you buy movies directly.) Disney has always been a master at controlling its own film availability to stoke consumer demand. Marvel and Star Wars material could remain licensed to Netflix for far longer.
Disney made the announcement during the company's second quarter earnings call. Announcing Disney's results this week, which saw slight decline in revenue and a 9 percent drop in net income, chief executive Iger highlighted Disney's competitive advantage. These announcements from Disney and CBS suggest that process is well underway. CBS thinks Star Trek fans will pay for its online service just to watch the new show (it's wrong about that), and you can bet a lot of studios are watching to see if consumers will pay a per-studio or service fee for each individual company.
This is not Disney's first attempt to go directly to the consumer. Disney will draw on its own content from its film and television catalog for its consumer channel, and offer a sports service which could fill a gap by delivering live sporting events.