On Thursday, Disney officially announced plans for its streaming service, Disney+, revealing that the SVOD service will launch on Nov. 12 and be priced at $6.99 per month and $69.99 per year.
After Disney+ was announced, the news was quickly reflected in both companies' stock prices, with Disney shares surging as high as 12 percent on Friday to an all-time high of around $130 and putting it on pace for its best day since May 2009, CNBC reports. Meanwhile, Netflix's stock took a dip of around three percent.
Disney+'s low price point was a major wow factor in its presentation, with the $7/month tag almost half of Netflix's, which charges users $12.99 per month for its standard plan.
Disney estimates that by the end of its first year, Disney+ will host more than 7,500 episodes of television and 500 movies, with a number of items available at launch and more rolling out as the months continue. Disney CFO Christine McCarthy told analysts that the company will spend $1 billion in cash on original programming for Disney+ in 2020 with just under $1 billion in operating expenses. Spending on Disney+ originals is expected to rise to $2.5 billion by 2024, and the service is expected to sustain financial losses for its first four years before making a profit in fiscal year 2024.
The company projected that Disney+ will reach 60-90 million subscribers by fiscal year 2024, with its projected numbers much higher than what analysts had predicted.
"Disney is approaching streaming offerings with guns blazing, looking to take share and quickly ramp up subscriber growth," said Patrice Cucinello, director of the technology, media and telecom group at credit-rating firm Fitch Ratings. "Disney+ will be loaded on Day One with attractive IP and franchises, and has set the price very affordably at $6.99 per month, well below other premium SVOD offerings."
Despite Disney's optimistic report, some analysts still think the sheer quantity of content Netflix offers will help maintain its status as one of streaming's leading services.0comments
"We do not view Disney+ as a strong alternative to Netflix," Suntrust tech analyst Matthew Thornton said in a note on Friday. "Bottom-line, Disney+ features family content, while Netflix offers a much broader range of content with the majority of the most-searched content on the platform."
Photo Credit: Disney