The streaming wars are stepping up a notch after Disney unveiled details of its new Disney+ service which will launch worldwide in November and go head-to-head with Netflix. Apple’s Apple TV+ is, though no official dates have been confirmed, is also expected to launch before the end of the year. Presumably in recognition of what will become a fiercely competitive market for rival streaming services, Disney+ is being priced extremely aggressively at just $7 a month, or $6 with an annual subscription.
The price point is reported to have drawn “a collective gasp in the room” when announced. Netflix’s top tier plan costs $15.99 a month and its cheapest package $9.99. Stock market analysts were clearly impressed as Disney’s share price last Friday up 10% with gains at one point surpassing 12% before easing back. Gains have continued this week with the Disney share price up over 13.2% since the unveiling. The Netflix share price fell 3.5% on Friday and continued that negative trend on Monday.
Disney+ will also include more content than expected into the streaming service. Movies and TV show spin-offs from its Marvel, Star Wars, Pixar and Disney franchises will all be included. As well as catalogue content from existing films and series, the new service will launch with over 150 hours of brand new content, including 10 exclusive new films and 25 series.
Analysts including Goldman Sachs raised their 12-month price targets for the Disney share price, enthused by the low price point and faster than expected international roll-out. However, many still remain confident that Netflix’s broader selection of content and library designed to appeal across demographics, tastes and geographies mean that it can handle the competition.
It can be argued that the extremely low price of the Disney+ offering indicates that the company is trying to avoid direct conflict with Netflix. Perhaps the company hopes to convince consumers, in many cases, to add a Disney+ subscription to their existing Netflix or other streaming service subscription rather than replace it. That would perhaps make more sense for families with children and teenagers to whom the Disney content catalogue would appeal to more than middle-aged parents.
Morgan Stanley analyst Benjamin Swinburne wrote in a note to investors that he has faith in a strong future for both services.
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