Disney said on Tuesday that its upcoming streaming service, Disney+, would be available as part of a bundle that also includes ESPN and Hulu.
When Disney+ premieres on Nov. 12, the bundle will cost $12.99—the same as Netflix’s monthly streaming subscription. Disney CEO Bob Iger has called that a coincidence, unlikely as that may seem.
Whatever the case, Disney+ and its related bundle is a direct assault on Netflix’s dominance in streaming. Analysts at the investment bank Needham predict that subscribers to Disney’s new service will “mostly” be switching from Netflix.
Predictably, Netflix’s stock fell 2% in mid-day trading on Wednesday. That continues a tough run for Netflix’s shares, which also cratered on weak subscriber growth in mid-July, even without competition from Disney.
Disney’s stock was also down more than 5% Wednesday, but that’s due to unrelated losses in its new Fox film unit.
Analysts are increasingly concerned that, as competition heats up, Netflix’s first-mover advantage will fade. The key question is whether Netflix’s in-house content like Stranger Things can compensate for shows that it’s losing, both from Disney and other sources, because of expiring licensing deals.
Disney is the biggest single factor in Netflix’s uncertain outlook, though. Disney first announced its plans for a streaming service in 2017, at the same time that it said it would remove its huge library of films and T.V. Shows from Netflix. That includes traditional animated films like Lilo & Stitch, computer-animated films from Pixar, Marvel movies like Iron Man, and Star Wars films and shows produced by Lucasfilm. A lot of Disney content remains on Netflix, but those shows and films will be gone by the end of this year.
Instead, they’ll all live on Disney+, which will be offered as a standalone subscription for $6.99. That would be enough to put pressure on Netflix, but the Hulu and ESPN+ bundle is even more of a threat. Hulu, which is now wholly controlled by Disney, features first-run network television shows like Fresh Off the Boat as well as its own original programming. ESPN+ features niche live sports—less football, more rugby—in addition to sports-related shows.
That makes it a direct attack on Netflix’s goal of being a single destination for viewers. “After years of having the streaming world to itself, and green-lighting everything it could to have the widest appeal around the world, Netflix now has to pivot hard and specialize its content fast, to create any type of defensible moat it can,” said Stephan Paternot, CEO of film-financing platform Slated. “Until then its growth is going slow internationally, and struggle in the U.S.”
The breadth of the Disney+ bundle could also make it a strong counterpoint to the growing threat of ‘subscription fatigue.’ Since Netflix pioneered the concept, new services have proliferated wildly (here’s a list of more than 100), from niche art-film collections to network spinoffs like CBS All Access. In theory, customers could build their own ideal viewing menu from these disparate services, but managing them all separately is a headache.
Offering a simpler alternative is the premise of AT&T Now, formerly DirecTV Now, essentially a standard cable package delivered online. AT&T Now sorely lacks the buzz of Disney’s planned service, and it’s a lot pricier—starting at $50 monthly. But it could appeal to people who want the convenience of on-demand streaming without the hassle of all those subscriptions.
Similarly, Apple’s planned TV+ will include its own programming while offering specific channels as add-ons, much as Amazon’s Prime does now. That flexibility under one umbrella may be the sweet spot between traditional cable lock-in and the new Wild West of multi-subscription chaos. But Apple’s service reportedly won’t offer Netflix as one of its add-ons.
While Disney’s bundle may not be as comprehensive as AT&T Now, or offer the flexibility of Apple TV+ or Prime, it could be enough for many consumers. By contrast, Netflix’s shrinking library of content from Hollywood studios has it looking less like a single destination for cord-cutters, and more like one option on a crowded menu.
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