Disney Gets Green Light on BAMTech Buy

Disney is cleared to acquire a majority stake in the video streaming technology platform BAMTech ahead of schedule. The US Federal Trade Commission (FTC) issued an early termination notice yesterday, deciding there were no antitrust concerns raised by the deal.

Originally developed as an in-house streaming platform by MLBAM , the digital division of Major League Baseball (MLB), for streaming online coverage of baseball games, the platform was spun out into a separate unit in 2015. Walt Disney Co. (NYSE: DIS) acquired 33% of the unit in August last year for $1 billion. That investment also gave Disney the option of buying a majority stake, which it used earlier this year -- investing a further $1.58 billion to pick up an additional 42% of BAMTech. MLB and its 30 team owners will keep 15% of the company, and other investors including the National Hockey League (NHL) will retain minority shares.

BAMTech supports a number of video streaming providers including the PGA Tour, HBO's HBO NOW streaming service and of course, MLB and the NHL. Its primary competitors in this space are NBC's Playmaker Media and Turner Sports' iStreamPlanet, who recently announced a partnership for streaming various events. (See NBC's Black Is Ready to Play.)

Disney's investment in BAMTech is in part driven by a desire to launch its own direct-to-consumer services for children's and sports content (via the ESPN brand.) The media giant recently announced it would be ending its relationship with Netflix and launching its own streaming services in 2019. (See Disney Joins OTT Bandwagon.)

Details are sparse for both initiatives, but Disney is very clear about moving forward with a direct-to-consumer streaming strategy. It did disclose that the ESPN service will feature "10,000 live regional, national and international games and events a year, including Major League Baseball, National Hockey League, Major League Soccer, Grand Slam tennis and college sports."

It also announced a partnership with streaming company iflix for distributing its content outside the US shortly after. Disney will have its own channel on iflix, which will include content from Disney's TV properties as well as Marvel and Pixar movies. (See Disney, iflix Team Up to Take Down Netflix.)

iflix claims more than 5 million subscribers worldwide. It is currently offered in Malaysia, the Philippines, Thailand, Indonesia, Sri Lanka, Brunei, the Maldives, Pakistan, Vietnam, Myanmar, Saudi Arabia, Jordan, Iraq, Kuwait, Bahrain, Lebanon, Egypt, Sudan, Cambodia, Nigeria and Kenya.

While the acquisition of BAMTech helps cement Disney's OTT strategy, it will face significant competition. A number of other content providers including CBS and Viacom are launching their own OTT services, and others are waiting in the wings. (See CBS Streaming Service to Expand Globally.)

And this is in addition to more established OTT services such as Netflix Inc. (Nasdaq: NFLX), Amazon Prime Video, Home Box Office Inc. (HBO) and Hulu LLC .

And there are suggestions that consumers may be getting frustrated by the number of OTT services available and the growing complexity involved with getting the content they want online. (See Too Many Streaming Services, Say Millennials.)

Disney has a unique brand and undoubtedly valuable content. BAMTech will give it a solid, proven platform to distribute that content. But the company should be concerned about the sheer number of new OTT services being launched, and how frustrating and expensive this is could all become for the average consumer.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation

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