Walt Disney (NYSE:DIS) does not want to help Netflix (NASDAQ:NFLX) add subscribers. The media giant has told its streaming rival that it won't accept ads from Netflix on its entertainment networks, CNN reported. The House of Mouse will, however, still let the streaming leader buy ads on ESPN, because Netflix does not offer live sports.
Why is Disney doing this?
Since it launched the Disney+ streaming service, Disney has become a direct competitor to Netflix. In theory, an ad for the streaming giant appearing on a Disney-owned channel could lead to someone subscribing to Netflix over Disney+. It could also remind people watching Disney programming that they already have a Netflix subscription and that there may be something better to watch there.
Disney does not want to lose eyeballs to its television networks. Fewer people watching means lower ad rates and less ability for the company to promote its own streaming service. Essentially, the company has decided that protecting its turf and keeping its viewers from seeing Netflix ads is worth more than the money it could bring in for those ads.
Is this a Mickey Mouse strategy?
Consumers know that Netflix exists and those who need a reminder will likely get one elsewhere. This is Disney turning away ad dollars in a way that won't really protect its business or help Disney+ grow.
Maybe the company keeps a few subscribers away from the streaming leader and maybe a few viewers stay tuned to its channels rather than leaving to watch whatever show Netflix advertises. Overall, it's hard to see this move as hurting Netflix or helping Disney in any meaningful way.