Netflix and Disney Battle it out, but the Latter Has the Price Edge
With advanced and user-friendly stock trading software, stock market activities are becoming more popular. Something else that has caught the public’s attention is the content streaming platform.
The content streaming industry is competitive to such an extent that conventional television viewing is at risk of getting confined to history textbooks. While there may be multiple players in the market, two of the most prominent are Disney ($DIS) and Netflix ($NFLX). Investors are really chuffed about Disney since it has finally revealed details about its streaming service called Disney+.
What Disney+ Targets
Disney+ is a new service with which it intends to target the direct-to-consumer market. It plans to debut the service on November 12, but the news already sent the company’s stock rising by 11.5% at the Friday market opening, an all-time high then. By contrast, Netflix ($NFLX) fell 4.5%. It’s a clear indication of Wall Street’s perception that Disney+ could take the fight right up to Netflix.
Netflix does have some aces up its sleeve. Its Tuesday earnings report is expected to add 9 million more subscribers to the 139 million-strong paid membership it already has. So it would seem that Disney has a mountain to climb to get to an established player like Netflix. But Motley Fool analyst Danny Vena reckons that Disney particularly has the price advantage.
Disney’s Massive Price Advantage
Disney+ will be priced significantly below Netflix, according to CEO Bob Iger. Disney is planning to offer its streaming shows for a monthly rate of $6.99 or an annual rate of $69.99. The annual subscription only costs around $5.83 per month, even cheaper than the monthly subscription rate.
Netflix, on the other hand, has raised its price for the 4th time in 5 years. A Netflix monthly subscription now costs $12.99. That hasn’t stopped the subscriber numbers from increasing though. Danny Vena points out that domestic market growth is slowing for Netflix. So, future growth needs to come from international markets. But the increased subscription rate could prove too expensive for potential customers in developing countries. Disney’s annual pricing comes to just half of the Netflix rate. People in developing countries could be tempted to select Disney’s service over Netflix.
Netflix seems to have realized this and is testing a cheaper service just for mobile phones. But it’s only in the testing phase now. And this needs to be rolled out if it must counter the threat by Disney.
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