Netflix on Tuesday took a hit in the markets after Disney revealed it would launch its own Disney streaming service and subsequently end its distribution deal with Netflix.
As of 5:28 p.m. EST, Netflix’s stock was down more than 3% in after-hours trading.
Disney’s deal with Netflix included pay-TV exclusive rights that started late last year and gave Netflix first access to films including “Moana” and “Rogue One.”
Disney’s new plans for its streaming service include making it the exclusive home for live-action and animated Disney and Pixar films, which means those films will no longer be available on Netflix beginning with the 2019 fiscal year for Disney.
Disney CEO Bob Iger during Disney’s earnings call Tuesday said that the output deal for Star Wars and Marvel films could also be affected.
Disney has talked about launching proprietary services for its Star Wars and Marvel films, and the company has also considered including those services with the upcoming Disney direct-to-consumer service. But Iger said that Disney hasn’t decided yet what will happen with the Star Wars and Marvel content.
During the call Tuesday, Iger was careful to position the discontinuation of its agreement with Netflix not as a falling out with the SVOD, but as more of a logical next step. Iger said that the Disney deal gave Netflix some marquee content while it was still ramping up its original content slate, which it has since done aggressively to the tune of a $6 billion content budget for 2017.
Netflix may have been anticipating the loss of Disney content from its service when earlier this week it announced its first acquisition. Netflix is buying Millarworld, the comics publisher behind titles “Kingsman” and “Kick-Ass,” and planning to creating films, series and kids’ shows.