On the 12th of November, 2019 Disney plan to launch a streaming service called Disney+ to rival Netflix which means that all those Disney favourites will become available in high quality. Disney CEO Bob Iger advised shareholders that all Disney movies would be moved from Netflix and he expects the new service to start with over 160,000 million subscribers. Iger (who will retire in 2021 when his contract expires) said that the loss of income from Netflix will be more than compensated due to the world wide recognition of Disney’s favourites such as; Walt Disney Animation; Marvel; Pixar; Star Wars etc. Prices in the USA will commence at a low US$6.99 per month.
This announcement follows on from the Disney takeover of major parts of 20th Century Fox in March making Disney the world’s largest media outlet. The deal included a transfer of 30% of Hulu (doubling Disney’s stake) which is a live ‘ad’ free TV streaming service (not currently available in Australia).
The strategy, which will include content from Fox, will help reinforce Disney against competition from other tech giants such as Amazon and Apple who are also planning to enter the streaming market.
Netflix low monthly rates have, for some time, threatened Disney’s profit potential which has been affected by the decline in cable households. This has impacted the profitability of Disney’s cable networks which, in the 9 months to July, caused operating income to fall by 13%.