Digital streaming is the entertainment platform of the future, and many of the largest media companies are investing heavily in the industry. Netflix (NASDAQ: NFLX) has dominated streaming for years. Its service boasts more than 139 million subscribers globally, more than any other provider. However, Netflix will now see strong competition from new services. Disney (NYSE: DIS) is the latest company to enter the streaming market, with a cut-price platform set to be released later this year.
Disney Will Compete on Price and Content
Disney is the owner of some of the world’s most valuable media properties. From its own productions, to acquisitions like Marvel Studios, Fox, and Lucasfilm (Star Wars), Disney is now one of the largest media companies in the world.
This will give the company a powerful content base when it launches its streaming platform on November 12.
Disney’s platform will be exclusive to the United States when it launches later this year, but the company has plans to expand throughout North America and into international markets. Analysts believe that they could eventually match Netflix, thanks to its impressive brand power and global appeal.
Not willing to rest on brand alone, Disney has also made an aggressive decision to undercut Netflix on price, which could turn out to be a very smart move for the company.
Disney intends to launch its service for a $6.99 monthly subscription fee. Netflix’s most popular subscription plan costs $13.00 per month. This low-cost offer could mean that the streaming service runs very lean, or even at a loss in its initial stages. However, it will potentially allow them to capture a large segment of the streaming market.
Netflix Loses Rights to Disney Content
Up until this year, Netflix has enjoyed a lucrative distribution agreement with Disney. Both companies collaborated to create several well-received shows set in the popular Marvel universe. These shows have now been cancelled, and it is expected that future Marvel content will be exclusive to they platform.
Consumers will soon see a new era of digital streaming, with increased competition and more segmentation.
This will create interesting investment opportunities depending on how each platform performs. As it is today, Disney will be the underdog, but its huge appeal and significant marketing resources could allow it to quickly catch up to the competition.
Investors should consider the potential of the streaming service when evaluating the stock this year.
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