Disney nabs BAMTech in $1.6bn play for streaming services

Contact: Scott Denne

At the dawn of the internet, Bill Gates famously said, “Content is king.” For most of the 20 years since then, that sentiment seemed like a sick joke to content makers in print and music who saw their markets eviscerated by Google, Apple and other tech vendors. Now Walt Disney is paying $1.6bn to find out if the adage is finally coming true.

Facing fleeing customers from its cable networks and having handed over online distribution of its films to Netflix, Disney is aiming to take back direct control of its content by building out its own streaming services through its ownership of BAMTech. Disney will spend $1.6bn to purchase 42% of BAMTech, adding to the 33% stake it previously bought in the video-streaming services spinoff of Major League Baseball.

Its desire to own – rather than just be a customer of – BAMTech shows that Disney sees value not only in building its own streaming services but also in enabling other studios to do the same. In that respect, its strategy aligns with those of the major tech companies, most of which have made a push for original content through expensive licensing deals and original content production.

With the pending launch of its own streaming services (it plans to unveil one for sports and one for its entertainment library), Disney hopes to build a direct distribution channel that will generate more value for its content – both in terms of fees and of having direct data about its customers and their viewing preferences – than what the combination of Netflix, MSOs and advertisers are able to pay. Disney watched as the economics of print and music flowed to digital distribution channels. But in buying BAMTech, Disney is making a bet that quality content will reign supreme in video.

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