Disney to discontinue online streaming service

Lack of users, high expenses cited as reasons for closure
Tools

Disney (NYSE: DIS) announced Monday it will discontinue its Disney Movies Online service at the end of the year, according to a statement on its site.

Although Disney Movies Online has been available since 2009, it "didn't generate the number of users that was expected and the service was costly to run," according to a source cited in a Deadline story.

A Disney spokesperson cited different reasons for the decision, saying the initiative "does not have the flexibility that many users today demand."

In an industry becoming ever more crowded with online streaming services, this one may have found itself increasingly overwhelmed or marginalized by more versatile ones such as Netflix (Nasdaq: NFLX) and Amazon Prime (Nasdaq: AMZN), both of which offer numerous Disney titles as well as TV shows and movies from other networks.

Disney is not completely bowing out of the online video market, though. According to several sources including the L.A. Business Journal, Disney plans to release a new streaming venture, Disney Movies Anywhere, at some unannounced future time.

For more:
- see Disney's statement
- read the Deadline story
- check out the L.A. Business Journal article

Special Report: Top 5 game-changing online video services

Related articles:
Disney: ESPN ad revenue flat in Q4 2012, 'pacing down' in Q1
Disney's $4B Lucasfilm acquisition could boost cable channels
Providence Equity selling Hulu stake to Disney, News Corp. and Comcast