- Disney blocks Netflix from advertising across its entertainment networks
- ESPN to continue to air Netflix ads, live sports deemed less competitive
- Disney+ streaming service set to directly compete with Netflix
Walt Disney has stopped airing ads from the streaming giant Netflix on its entertainment networks after changing its advertising policy ahead of pushing into the streaming world.
Disney’s channels including ABC, Freeform, National Geographic, and FX will no longer have Netflix advertising, according to reports, but ESPN will be the exception and still air Netflix ads.
In a statement, a Disney spokesperson said: “The direct-to-consumer business has evolved, with many more entrants looking to advertise in traditional television and across our portfolio of networks.
“While the initial decision was strictly advertising-based, we revaluated our strategy to reflect the comprehensive business relationships we have with many of these companies, as direct-to-consumer is one element.”
The company will launch its highly anticipated streaming service next month and has pulled back a lot of its programming from Netflix including films such as Moana, Finding Dory, Pooh’s Grand Adventure and Marvel Entertainment franchises.
Disney+ is set to directly compete with Netflix. With its commercial-free offerings as well as launching into the streaming space, Disney also controls Hulu, which includes advertising and commercials.
According to the report first published by The Wall Street Journal, Disney’s decision to change its advertising policy and its content distribution deals represents a hardening of Disney’s stance and ambition to enter the streaming market.
The move comes as media and entertainment companies revaluate their competitors in the wake of a rapidly changing media environment. For years prior, broadcast networks have refused to run ads from their network competitors and placed restrictions on ads from cable channels. Most cable channels would similarly refuse ads from their direct competitors.
However, most TV networks have had little problem accepting ads from Netflix, even though it was in the business of delivering TV shows and movies to consumers.
It was viewed as something closer to HBO, a premium product rather than a true competitor.
Netflix has quickly become one of the entertainment industry’s biggest ad buyers, spending $1.8 billion in 2018, and is on pace to top that this year, according to its quarterly financial reports.
It has also been a major advertiser on events like the Super Bowl and the Academy Awards.
In the coming months, more traditional media companies will launch bespoke streaming services.
AT&T’s WarnerMedia is poised to unveil HBO Max, while Comcast’s NBCUniversal will launch a service called Peacock.
According to Variety, Disney’s strategy poses a risk.
Streaming video is one of the fastest-growing categories in TV advertising and the company risks losing out on some portion of millions of dollars of ads, which could well go to rival networks.
Disney’s decision could see the company lose out on millions of advertising dollars.
Disney in some cases agreed to deals with lower rates than its competitors, according to media buyers and TV executives. Those pacts, with companies like Publicis Media and Horizon Media, called for Disney to get narrower increases in the cost of reaching 1,000 viewers.