Netflix Stock Drops After Disney Plus Pricing And Programming Announcement

Netflix Stocks
The Netflix logo is seen on their office in Hollywood, Los Angeles, California (Photo: Reuters)

After years of dominating the video streaming space, Netflix finally now has a formidable competitor that is set to seriously challenge its reign.

Disney's recent announcement of its Disney Plus streaming service is expected to result in a serious battle for supremacy in the sector, seriously testing both companies' capabilities, experience, and pockets. The announcement has even caused Netflix to share prices to drop, with investors now swooning over the new property.

This year has been a particularly good year for Disney, with a slew of blockbusters set to hit the silver screens, which includes the newly unveiled "Star Wars" sequel. The company also recently completed its acquisition of Fox, giving it a massive advantage in terms of popular media properties.

Prior to the announcement, Netflix has been the top dog in the video streaming sector, leaving its closest competitors in the dust in terms of viewership and revenue.

Netflix doesn't consider competitors such as YouTube and Criterion Collection a threat to its dominance given that these companies focus more on niche markets. The company also currently leads the pack in terms of the number of diverse selection it offers its viewers.  

With the most recent announcement of Disney's full list of programming and pricing for its Disney Plus streaming service, Netflix stock prices dropped by as much as 4 percent.

This translates to a loss of around US$7 billion in the company's market value. While the figure may not be as substantial as it sounds, it is a big deal for investors whose sentiments have now started to change given the new option. The drop is also quite a big deal in the market as Netflix's stocks have been mostly increasing in the past 12 months.

Apart from introducing a direct competitor to Netflix's service, Disney had also revealed that it will be pulling out all of the programming and movies it owns from other streaming services.

This will result in Netflix losing a big chunk of its programming when Disney Plus finally launches this coming November. To make matters worse, Disney's subscription prices are almost half of what Netflix is currently charging its customers. Disney Plus will reportedly be offered at US$6.99 per month or US$69.99 per year. This is significantly lower than Netflix's standard pricing of US$13 per month.

Netflix CEO Reed Hastings mentioned in a previous interview that he was actually not worried about the new competition. The company apparently is still doing very well given its renewed effort to increase its production of original content. Netflix's various awards and accolades for its original content have also made it quite a media behemoth, something that Disney will still need to prove with its new service.

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