Walt Disney Co is pricing a new bundle of streaming services at a surprisingly low US$12.99/month, challenging Netflix with a package that includes family programming, live sports and a deep library of television shows.
The entertainment giant announced the combined pricing for Disney+, ESPN+ and Hulu on a conference call on Tuesday with investors. It will debut as part of the November launch of the Disney+ service and represents a near 30% discount to their individual prices.
Disney is matching Netflix’s standard plan and marketing the service $3 below its rival’s premium version, which lets subscribers and their family members watch on as many as four devices at once. But two of the Disney services, ESPN+ and Hulu, carry advertising, while Netflix is ad-free.
The company’s crusade to become a streaming giant has been a costly one. Investments in new online services led to a $553-million loss in Disney’s direct-to-consumer division, part of generally disappointing results released on Tuesday. And that deficit is expected to rise to $900-million in the current quarter.
But Disney’s trove of films and TV shows from its Marvel, Pixar and Star Wars brands will make it a formidable competitor, said Ivan Feinseth, chief investment officer at New York’s Tigress Financial Partners.
“Disney has powerful content,” he said in an interview with Bloomberg Television.
Headaches
The aggressive pricing could also create headaches for HBO Max, a streaming service from AT&T that’s scheduled to launch next year. That package also will offer family programming and original shows. The cost for that package hasn’t been announced yet. But HBO alone costs $14.99/month, suggesting that it will be hard to compete with Disney’s price.
Disney is betting online services will counter the loss of conventional TV viewers for flagship channels like ESPN, ABC and the Disney Channel. Earlier this year, the company spent $71-billion acquiring the movie and TV assets of Fox to bolster its future offerings.
With Hulu + Live TV, the company also offers a package of 60-plus live television channels intended to compete with cable and satellite services for $44.99/month. — Reported by Christopher Palmeri, (c) 2019 Bloomberg LP