Why Should I Care?
For markets: Disney warned that its investment in streaming will dent profits.
Disney also announced on Wednesday that it was spending $1.6 billion to take a bigger ownership stake in a streaming technology firm called BAMTech (Disney already bought about a third of the company last year for $1 billion). BAMTech’s expertise will help Disney build its streaming service. Eventually, that investment may turn out profitable; but for now, it’s just expensive, and will hurt Disney’s near-term profits.
The bigger picture: The streaming landscape is getting crowded quickly.
There are a lot of streaming options already: CBS All Access, HBO GO, Amazon and Netflix are in the game, while other media companies, like Viacom, are planning more launches. Consumers probably won’t pay for all of these services, so the market for streaming will likely have to shrink – and not everyone will be a winner.