Since media giant Disney (DIS -1.01%) made the decision to enter the streaming space, the company has had its sights set firmly on industry leader Netflix (NFLX 1.74%). The streaming titan has been among the most successful consumer discretionary stocks of the past decade, and Disney clearly wants a piece of the action.
Several recent developments illustrate just how serious the House of Mouse is about taking on Netflix, and it appears the gloves are coming off in the battle for streaming video supremacy. Here are three ways Disney+ will likely go after Netflix:
Disney+ is counting on more than just great content to compete. Image source: Disney.
1. Downloading content for offline viewing
Netflix got ahead of the curve nearly three years ago when the company announced it would allow subscribers to download select movies and television shows for offline viewing. The feature had long been sought by customers as a means to cut down on data usage while also letting them continue watching programs when an internet connection was limited -- or expensive.
Disney-controlled streaming service Hulu struck back earlier this month, allowing iOS customers on its No Ads plan to download and save from a selection of thousands of TV series and movies for offline viewing even when an internet connection isn't available. Subscribers are permitted to download up to 25 titles at a time across five devices, giving them up to 30 days to watch the content. Hulu said the feature would be coming to Android users soon. No doubt Disney will have a similar strategy in place for the launch of Disney+.
This is one way Disney is hoping to reduce any competitive advantage Netflix may have.
2. We don't want your ad money
As Disney is set to enter the streaming wars in earnest with the debut of its flagship Disney+ service, the company has taken the unusual step of banning Netflix advertisements on the majority of its networks. The company, which owns TV/cable networks ABC, FX, National Geographic, and Freeform, among others, will no longer accept ads from its streaming competitor, with one notable exception: Netflix advertising will still appear on ESPN.
In a statement, Disney said the "direct-to-consumer business has evolved, with many more entrants looking to advertise in traditional television, and across our portfolio of networks." The company added that it had "reevaluated our strategy to reflect the comprehensive business relationships we have with many of these companies, as direct-to-consumer is [just] one element."
Image source: Disney.
3. Pricing rates in the plus column
When Disney announced details about its upcoming streaming service, one factor that stood out was the company's aggressive pricing policy. A monthly subscription for Disney+ will cost $6.99 per month, while a comparable plan from Netflix runs $12.99. Disney's streaming service is also available for $69.99 per year (or about $5.83 per month) -- less than half the cost of Netflix's standard pricing tier.
That was just the beginning. Members of D23, Disney's fan club, were offered a $23 discount for a three-year commitment, a 33% savings off the standard annual price. The company has since offered a variety of multiyear pricing plans to other Disney customers.
In addition, Disney announced that fans would be able to bundle Disney+, ESPN+, and the ad-supported version of Hulu, all for $12.99 -- getting all three for the price of Netflix's most popular plan.
Firmly entrenched
It's important to note that despite Disney's best efforts, it will still be difficult to dislodge Netflix from its first-place perch, as evidenced by a study conducted last month by analyst Michael Olsen of Piper Jaffray. A survey of 1,500 Netflix subscribers found that about 75% of respondents said they had no plans to subscribe to Disney+ or to Apple's Apple TV+, which is also set to debut next month.
Even more telling, of those that plan to add a competing service, "the vast majority expect to also maintain their Netflix subscription."
"Despite an onslaught of new streaming services currently casting a cloud of concern over Netflix shares, we expect the company will continue to capture a significant portion of traditional content dollars, as those dollars migrate to streaming," Olson wrote.
Only time will tell if Disney's streaming ambitions will ultimately prevail, but one thing's for sure: the House of Mouse is pulling out all the stops in an effort to succeed.
