Disney set to introduce direct online streaming service

Disney is set to launch an online streaming service to rival Netflix.

Disney (NYSE:DIS) has announced its intention to introduce direct online streaming, in a blow to Netflix (NASDAQ:NFLX).

It will launch an ESPN-branded sports service early next year and a Disney streaming service in 2019.

The measure will see the end of its distribution deal with Netflix, and sent Netflix down almost 3 percent in after hours trading.

“U.S. Netflix members will have access to Disney films on the service through the end of 2019, including all new films that are shown theatrically through the end of 2018,” the company said in a statement.

Disney boss Robert Iger said the introduction of its direct streaming services “mark the beginning of what will be an entirely new growth strategy for the company”.

Mr Iger said the move reflect Disney’s move to react to “changing market conditions”, with consumers increasingly turning to online streaming services for entertainment.

“It’s not just a defensive move,” Mr Iger said. “It’s an offensive move.”

The move will see the media giant attempt to challenge competitors such as Netflix and Amazon, by adapting to changing consumer patterns.

As part of the transition, Disney plans to take majority ownership of BAMTech, a video-streaming company started by Major League Baseball.

Disney is set to pay $1.58 billion (£1.2 billion) to increase its stake from 33 percent to 75 percent.

However, it remains to be seen whether Disney will be able to successfully assert itself within an already over-saturated market for online streaming services.

Netflix continues to overwhelming dominate, with worldwide subscribers topping 100 million back in July.

This follows Tuesday’s company results reporting, with group profits dented by issues at sporting network ESPN.

Performance at the network was marred by higher programmer costs as well as a decrease in advertising revenues.

Disney said it earned $14.24 billion in revenue, missing expectations of $14.42 billion and causing shares to drop as much as 3 percent.

Shares in Disney are currently trading up 0.59 percent as of 12.33PM (GMT).