Disney Reaches Deal With Sony Pictures Home Entertainment For Physical Media

Mark Ashman/ Disney via Getty Images

Disney has reached a licensing deal with Sony under which the latter’s home entertainment division will handle all Disney releases on DVD and Blu-ray as well as all physical media production.

It’s the latest sign of the decline of the physical disc trade. Netflix last fall unplugged its foundational disc-by-mail service and revenue from disc sales has continued to decline markedly in the streaming era, as indicated this month in a 2023 recap by the Digital Entertainment Group, a trade consortium. The DEG’s preliminary annual report found robust demand for movie titles lifted overall revenue 17%, but disc sales and rentals dropped 25% to just shy of $1.6 billion.

The two studios declined to comment when contacted by Deadline.

Sources familiar with the agreement, which was first reported by website The Digital Bits, said the new setup will operate on a licensing model. Sony will market, sell and distribute new Disney releases as well as catalog titles on DVD, Blu-ray and 4K Ultra DVD via retailers and distributors in the U.S. and Canada.

The shift was part of a larger evaluation of Disney’s strategy for reaching consumers and comes as the company is facing pressure from some investors to deliver more cost efficiencies. Restructuring and staff reductions in 2023 have delivered at least $7.5 billion in cost savings across the company.

Disney historically has been a home entertainment power due to the family nature of its film slate, both in animation and live action. Repeat viewing made even the initial hefty investments in VHS tapes in the 1980s worthwhile investments for families, with that behavior carrying over to the era of the DVD and Blu-ray.

Streaming, however, has become the default option for most consumers in recent years. Disney is keenly focused as a company on finally achieving profitability in the coming months on flagship streaming service Disney+, which launched in November 2019.

Sony, meanwhile, is not a combatant in the streaming wars in the way its media peers have waged them. While it operates niche services like the growing anime outlet Crunchyroll, the company has no general-entertainment platform of its own, and therefore approaches its studio business in many ways that differ from its top-tier competitors.

Despite the downward trajectory of the sector, cinephiles will likely continue to support 4K Ultra DVD, which renders films in the highest available resolution. Last November, 4K copies of Oppenheimer sold out at major retailers, forcing Universal Pictures to scramble to replenish the stock before the end of the holiday season.