Disney Strikes Out in the Online Video Streaming Business


Mickey Mouse can't carry a streaming platform on his own.

Disney (DIS) is shutting down its Disney Movies Online platform. Visitors to the family entertainment giant's video streaming site are being told that the hub is closing at the end of the year.

"As part of this change, purchases, upgrades, and Magic Code entries can no longer be made on the Disney Movies Online website," reads the solemn obituary. "You can continue to stream your existing movies until December 31st."

Disney is offering refunds on movies purchased or upgraded on Disney Movies Online until the end of February, but folks that bought Disney Combo packs with digital copies for the sake of streaming them through Disney's platform are out of luck. However, they can still transfer those digital copies to their own drives to watch through iTunes or Windows Media Player.

Goofy in Cyberspace

This isn't the first time that Disney has closed down an online entertainment destination.

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Disney shuttered Virtual Magic Kingdom in 2008 after a three-year run. Virtual Magic Kingdom was a free online game where registered users would play games to win virtual goodies as their avatars explored an online version of the company's flagship theme park.

There was an outcry when Disney closed the game down, but it was a free game that Disney argued was supposed to be a limited-time promotion all along.

The company can't make the same case for closing down Disney Movies Online. Folks were making purchases and upgrades under the notion that their investments would continue to be accessible.

Streaming Alone Can Be a Mistake

Disney isn't necessarily a laggard when it comes to digital video. Disney was the first major studio to provide Apple's (AAPL) iTunes with content, though it probably helped that Steve Jobs would eventually become Disney's largest shareholder after the sale of Pixar to the family media darling.

Disney's ABC.com was also one of the first broadcasters to make its prime time shows available for Internet streams at no charge.

However, even Disney isn't big enough to support a streaming venture that streams only its videos. Consumers crave one-stop shopping solutions. They would rather have a wider assortment of content from more studios.

Disney never revealed any metrics indicating the success or lack thereof with Disney Movies Online, but no one should be surprised to learn that it didn't gain enough critical mass to keep the flicks flowing.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Disney. The Motley Fool owns shares of Walt Disney and Apple. Motley Fool newsletter services have recommended buying shares of Walt Disney and Apple and creating a bull call spread position in Apple.

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