Disney will not be running Netflix ads on its entertainment networks moving forward, escalating the competition between the two companies a month before the Mouse House launches its new streaming service.
The Wall Street Journal first reported the news Friday morning.
Netflix ads will still appear on one Disney-owned channel — ESPN — but will no longer run on ABC and Freeform, according to CNBC.
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Disney did not immediately respond to TheWrap’s request for comment.
“The direct-to-consumer business has evolved, with many more entrants looking to advertise in traditional television, and across our portfolio of networks,” Disney said in a statement to CNet. “While the initial decision was strictly advertising based, we reevaluated our strategy to reflect the comprehensive business relationships we have with many of these companies, as direct-to-consumer is one element.”
Disney’s decision comes a month before its new streaming service, Disney+, is set to debut. The $6.99 per month service will feature original series, Disney classics, and major franchises like “Star Wars” and “The Simpsons.”
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Netflix, which laps the streaming field with more than 150 million customers globally, will face a formidable opponent in Disney, according to many industry experts. Needham analyst Laura Martin, in a note to clients in August, said “We project [Disney] will win (and Netflix will lose) the U.S. SVOD battle.”
Martin forecasted Disney will eat into Netflix’s 60 million U.S. accounts and reach 24-30 million domestic subscribers by 2024, pointing to Disney’s price, its “strong balance sheet” and library of content as key growth factors.
Still, there is reason to believe the Netflix-Disney rivalry won’t shape up to be a zero-sum game. More than 70% of Netflix subscribers said they see Disney+ as a complimentary service, rather than a replacement, according to a recent survey from Ampere Analysis.
“Of course the absence of Disney content from Netflix, alongside the pending removal of shows such as ‘The Office’ and ‘Friends’ may have a slight impact on subscriber numbers,” Toby Holleran, senior analyst at Ampere, said. “However, we expect Disney+ is more likely to displace smaller SVOD services.”
Jennifer Maas contributed to this report.
