>> Walt Disney, America's most valuable media company choosing to sever ties with Netflix and go it alone. The entertainment conglomerate boasting hits from the Marvel Universe and the Star Wars franchise, announcing Tuesday it's launching a new movie streaming service and will stop providing movies to Netflix in 2019.
Video streaming firm BAMTech is at the heart of Disney's streaming strategy, explains Reuters entrainment watcher Lisa Richwine.>> BAMTech is technology that powers streaming services. So it will give Disney the ability to start services like Netflix. One for movies and one for sports, one of them Disney name and one of them the ESPN name.
The ESPN service will start early next year. It will have a range of sports, including baseball and hockey.>> Disney plucking down roughly $1.6 billion to bulk up its stake in BAMTech to 77% after taking a smaller position last year. All of this as revenues head in the wrong direction.
Quarterly sales dipping in the April to June period at Disney as subscriber numbers for ESPN continue to dwindle, making matters worse. Higher programming costs are eating into profits.>> Well, Disney is betting that in the long term, this will make up for the losses that it is experiencing through cord cutting.
They think, over time, that viewing is shifting online and that they need to be there. So they're taking a gamble that by putting content there, they're going to sign up more subscribers.>> Investors not ready to declare a winner in the coming head to head fight between Disney and Netflix, both stocks selling off on the news.