What happened

Walt Disney (NYSE:DIS) shares traded lower on Wednesday, following the release of third-quarter results and the announcement of a new push into streaming-video services. The multi-year contract with Netflix (NASDAQ:NFLX) for first-window rights to new Disney movies will be allowed to expire at the end of 2018. Disney shares spent most of the trading session roughly 5% below Tuesday's closing price.

So what

The first-quarter report was a mixed bag. Earnings of $1.58 per share came in just above Wall Street's expectations, while the $14.2 billion revenue haul landed just short of analyst projections. Sales were flat year over year, earnings declined by 5%, and free cash flows jumped 33% higher. Great results in the parks and resorts segment were undermined by high programming costs and slow ad sales at sports network ESPN.

But that wasn't the driving force behind Wednesday's falling share price. Disney is investing another $1.8 billion in streaming video company BAMtech, on top of an earlier $1 billion investment in the video platform that was created by Major League Baseball 17 years ago. Investors seem skeptical about BAMtech's chances of earning back that large purchase price and might have preferred Disney to nurture its Netflix partnership, instead.

Netflix shares fell as much as 4.7% on the same news, but recovered to a smaller 2.3% drop as of 3 p.m., EDT.

Cartoon of two businessmen walking in opposite directions, breaking a chain that had been linking them together.

Image source: Getty Images.

Now what

The ESPN albatross continues to haunt Disney, but BAMtech may very well cure that particular issue in time. The service already serves video streams for major and minor league baseball, the National Hockey League, and many other attractive sports properties, and should fit ESPN like a cartoon hand in a four-fingered glove.

The platform's value as a more general service for movie and TV show streams, on the other hand, is debatable. On the upside, Disney isn't betting the entire digital farm on BAMtech. The new streaming service will hold exclusive subscription video-on-demand rights to movies produced under the Walt Disney and Pixar brands. Marvel and Lucasfilm might get their own streaming services later, but no decision has been made on that yet. Netflix remains a close Disney partner through the end of 2018, and may be able to renew some streaming rights before the existing contract expires.

Chalk this one up to uncertainty. Disney CEO Bob Iger usually knows what he's doing, but this particular move doesn't make a ton of sense right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.