On Thursday afternoon, The Walt Disney Company changed the streaming landscape for good with a presentation of its upcoming service, Disney+. The new streaming option, which will contain the entire Disney library (including Marvel, Pixar, and Star Wars), instantly became a trending topic around the world, and already has fans excited to subscribe when it launches in November. The best part? Disney+ will only cost $6.99 per month, or $69.99 per year. That's about half the price of Netflix right now. As you can imagine, this presentation was not great news for Netflix, and the company's stocks are already reflecting that.
According to CNBC, Netflix shares dropped by 2% on Friday morning following the Disney+ presentation. That may not sound like a big dip, but that drop shed around $3.2 billion from Netflix's market value. Disney's service doesn't launch for another six months, and it's already cutting into Netflix's business.
Fortunately, it's not all bad news for Netflix at the moment. Despite the Disney drops, the value of Netflix is still up nearly 19% year-over-year. Some analysts feel that, while Netflix may see some losses when Disney+ arrives, the streaming service isn't in that much trouble in the long run.
“Bottom-line, Disney+ features family content, while NFLX offers a much broader range of content with the majority of the most-searched content on the platform,” analysts from SunTrust wrote. “As such, we do not view Disney+ as a strong alternative to NFLX.”
Still, Netflix will now have to make some changes to its strategy if it wants to keep up with what Disney's about to pull off. Disney+ is starting with some massive advantages, particularly when it comes to its content library. Given the vast amount of IP Disney already owns, it doesn't have to pay any licensing fees to other companies in order to compile an A-list streaming service. Netflix still has to do that for anything that isn't an original. Because it owns its own library, Disney can keep its prices low, hurting Netflix and its ever-increasing costs.
Will you subscribe to both Netflix and Disney+? What do you think about Disney's new strategy? Let us know in the comments!
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