Yahoo Finance Disney's new streaming service shouldn't scare Netflix
Disney (DIS) is set to launch its own streaming service in late 2019.
On Thursday, Disney CEO Bob Iger said it would price this service “substantially below” where Netflix (NFLX) is right now, which for its most popular plan is $11 per month.
For some, this might indicate a future where Netflix’s preeminence in the streaming video space is overtaken by Disney, which is also set to pull some its programming from Netflix when its own service launches. On this outline, it might seem like Disney is developing a Netflix killer.
Speaking Thursday, Iger said explicitly that Disney is not trying to make a Netflix killer, saying on the company’s conference call that, “Our goal here is to be a viable player in the direct-to-consumer space, [a] space that we all know is a very, very compelling space to be in.
“We also believe that our brands and our franchises really matter, as we’ve seen through Netflix and all our other platforms. And so that gives us an opportunity as well.”
And Iger’s comments that online streaming is a “very, very compelling space” also make clear that it isn’t Netflix which is being most directly impacted by the rise of other streaming services, but the traditional cable providers.
If the traditional cable bundle were where Iger thought Disney could derive the most value for its content, it wouldn’t be breaking out its content into separate offerings, a la its forthcoming ESPN bundle next year.
With his comments on Thursday, Iger echoed what Netflix CEO Reed Hastings said back in January, when he argued that the proliferation of competitors in the internet video space only helps to solidify Netflix’s standing in the industry.
“It’s becoming an internet TV world,” Hastings said, “which presents both challenges and opportunities for Netflix as we strive to earn screen time.”
So while some might see competitors like Amazon (AMZN) Prime Video, Hulu, HBO Go, and now Disney’s forthcoming offering as a threat to Netflix, the building out of the internet video space serves to solidify Netflix’s position — and to weaken that of the traditional cable bundle.
Netflix has already established itself as a pillar of the entertainment industry and shows like “House of Cards” and “Stranger Things” have shown the company is a major cultural force. The company’s name has also become a verb (“Netflix and chill”), a sign that while its position might seem available to disruption, it is actually an entrenched consumer preference.
Disney’s new service, then, doesn’t really pose a risk to Netflix in terms of subscribers jumping ship, or even all that large of a threat that folks won’t sign up for Netflix. This service just makes it more likely that a consumer looking to avoid a cable bundle will be able to do so, and get even more of the content they actually want.
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Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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