[ad_1]
Walt Disney (DIS) seems to be positioning itself to take advantage of a vulnerability recently exposed to Netflix (NFLX): the discomfort of its customers in the face of price increases. Netflix lost subscribers in the United States and missed its goal of adding international subscribers in the second quarter.
Netflix said its recent price increases have presented challenges. Spencer Neumann, CFO of Netflix, said, "We also found that in areas where we have increased prices, we have seen high churn and lower retentions. So it was a combination of those two things. We think the main story concerned the seasonality, timing and nature of our content list, but pricing played a factor. "
Netflix has increased the cost of its video streaming service and is seeking more funds to fund its costly content strategy. As we discussed earlier this month, Netflix spent over $ 12 billion in content last year, including content licensing and original production.
In particular, Netflix doubled its initial production projects as it searched for upcoming movies and programs. This year, Netflix's content budget could exceed $ 15 billion and reach $ 17.8 billion by 2020.
Netflix customers say the service is too expensive
Netflix increases its prices to increase its ability to offer original content and may therefore lose some of its customers. A price survey released by Kill the Cable Bill on July 9 showed that about a quarter of Netflix subscribers in the United States think the service has become too expensive.
Netflix ended the second quarter with more than 60 million subscribers in the United States. According to the Kill the Cable Bill price survey, about 15 million Netflix subscribers in the US believe they pay too much for the video streaming service. We believe that as many as 15 million Netflix customers in the US could opt for an alternative video service if it offers attractive content and is offered at the right price. In our opinion, Disney might be able to take advantage of this vulnerability.
Notably, Disney pulls its films from Netflix to offer them exclusively on its Disney + video service, which it plans to launch on November 12. AT & T and Comcast have also shot some of their hit series from Netflix.
Disney using competitive prices against Netflix
In addition to pulling its content from Netflix, Disney also uses competitive prices compared to Netflix. At its D23 show last week, Disney offered US residents the opportunity to pre-order their Disney + service at a great price. Thus, residents of the United States would be able to subscribe to Disney + at a price of $ 46.99 a year, which would represent a significant saving over the annual price of $ 69.99.
The discounted annual price offer is $ 3.92 per month for Disney +, which is almost half of the usual monthly price of $ 6.99 per month. Disney +'s regular monthly fee is less expensive than Netflix's most popular $ 12.99 per month plan.
Disney's $ 3.92 special offer could be an opportunity to attract Netflix subscribers who are unhappy with the recent price increases.
[ad_2]
Source link