Disney to pull all its movies off Netflix

Disney's future is becoming clearer—and that's going to mean developing its own platforms to reach consumers.

Step one—break off its relationship with Netflix.

Disney announced on Tuesday that it will pull its movies off Netflix in 2019, marking the end of a multi-year relationship that helped Netflix grow into a dominant at-home entertainment company.

Step two—start its own streaming platform.

Disney also said that it is planning its own Netflix-style service that will debut in 2019.

In addition to a Disney streaming service, ESPN—the sports cable behemoth—will also launch its own streaming service. Such a move has been rumored for a while, now Disney is making it official.

There won't be any immediate changes, with Disney content remaining on Netflix until the end of the deal in 2019. Disney CEO Robert Iger said on the company's earnings call on Tuesday that classic Disney movies and Pixar movies would then move to the company's own service, but that Marvel and Star Wars movies could possibly still be licensed to other companies like Netflix.

A Netflix spokesperson also offered some clarity: "US 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. We continue to do business with the Walt Disney Company on many fronts, including our ongoing deal with Marvel TV."

It's a tough but necessary break up for the companies, which had until now enjoyed a lucrative relationship. Shares in both companies declined following the news.

It's not a huge surprise, but it's still a big loss for Netflix, which will now be missing one of the most-loved libraries in all of media, particularly as it pertains to children. Netflix has been bolstering its own youth-focused content for a while.

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While Netflix has been developing its own content, Disney has been working out how it will reach consumers without having to go through gatekeepers like Netflix. Once launched, Disney's streaming service will serve as direct competition to Netflix.

Netflix and Disney have been partners since 2012, when the companies struck a deal before streaming movies and TV shows over the internet had become an industry-changing phenomenon.

The news comes just days after Netflix announced the acquisition of Millarworld, the company founded by comic book legend Mark Millar, who wrote for Marvel. Jackdaw Research analyst Jan Dawson noted that this move pointed to a possible break up between Netflix and Disney.

"This is clearly an attempt to secure more original content for Netflix, but also something of a hedge against the time that Netflix’s deal with Disney and therefore Marvel goes away, though on the latter point the acquisition also likely raises the risk that deal does go away, so perhaps Netflix has already had signals (or has simply decided independently) that it won’t renew," Dawson wrote in an analyst note.

It's a big change for Disney, which for decades has operated almost entirely as a creator of films and television but left the distribution to other companies.

"Today we announced a strategic shift in the way we distribute our content," Disney CEO Robert Iger said in the company's earnings release, which also came out on Tuesday.

As part of Disney's move to launch its own streaming service, the company has now amassed a controlling interest in BAMTech, the company that powers live streaming video operations for a variety of sports and events.

That should help Disney with the tech side of its streaming service, something Netflix has spent years building out.

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This story is developing.