7:55am PT by Tim Goodman
Critic's Notebook: Disney+ Price Point Just Made the Streaming Wars Really Hurt
Disney's leap into the Streaming Wars on Thursday was not like a wrestler theatrically coming over the top rope. It was like a very confident boxer swaggering under the lifted middle rope, tapping the gloves once and going right to the roundhouse in hopes of a knock out.
But if you thought Disney+ was going to be a Netflix killer — or the KO that slayed the biggest bad out there — that was never going to be the case. There's plenty of room for both Netflix and Disney+ to live peacefully and profitably in a vast number of American living rooms. Now, if you want to know where that opening bell punch landed, look up north to Cupertino.
By rolling out a gaudy, content-bursting platform that mines the vast Disney vault, the Pixar collection, the Star Wars films, Marvel movies, sterling National Geographic content and the entirety of The Simpsons catalog — and doing it for an audacious $6.99 price point and only $69.99 to those who commit for a full year — Disney becomes the first company that might stop Apple loyalists in their tracks with this notion: "Is it really worth it?"
We'll know when Apple sets a price for its Apple+ service, which it didn't during its celebrity-filled, super glossy but low-content announcement on March 25. What we do know is that less than a month after that empty affair up in Cupertino, Disney set a launch date — Nov. 12 — plus, that leg-buckling $6.99 price tag.
Oof. That move was... savvy.
Disney knew all along it had something that Apple never had, and what no amount of celebrities or wonderfully directed black-and-white videos filled with platitudes about storytelling could compete with: a shit ton of content. By comparison, all the content. Apple's Achilles heel has been the fact that it never bought a studio or production company and never inherited a deep bench to populate its new service.
Although Apple had been rumored to be on the hunt to acquire a company with a back catalog for some time, the fact is that it didn't. And if you ask tech people familiar with Apple's motives in that arena, Apple usually gets what Apple wants. It is not shy about buying up other companies. Maybe entertainment companies were — justifiably — wary about selling to Apple knowing it was going full-on into the content game. Nevertheless, Apple came to the table last month with a decent amount of original content but no inkling to share much of it with the world prior to launch — whenever that is, presumably this fall. All the gloss in the world couldn't cover up the fact there was no price point revealed, no launch date announced and no trailers shown.
Is that a good look? It didn't seem like it at the time. Less than a month later, it looks exactly like what it was — a blunder. Keeping things secret might be the Apple way, but the Streaming Wars are a go already, not some distant battle, and Disney seemed to know that inherently better.
What is Apple going to do now — offer up its TV subscription for $5.99? At least one analyst suggested last month that Apple could get $15 a month for its service, unbundled, but that is the most Kool Aid-view of Apple customer loyalty ever pondered, especially now when one of the world's biggest media companies just essentially said, "Here's an endless supply of great things you love and want for nearly half of what you're paying for the most popular plan at Netflix."
The key thing to remember here is that Netflix customers also believe they are getting an endless supply of great things they love from Netflix, so their conundrum is not going to be, "Do I give up Netflix for Disney+?" and will instead be, "How do I pay for both of these services that seem so awesome?" The answer to that is probably overwhelmingly that they will figure it out and do it.
In what realistic world is the Netflix customer conundrum — just as an example, because as we know Apple hasn't set a price yet — going to be, "Should I get Disney+ with all that Disney, Pixar, Marvel, Star Wars and Simpsons content for $6.99, or should I get Apple+ and 18 shows I've never heard of for $10.99?"
You see the problem glowing like a hot phone battery. Even if Apple+ gets announced at $2 under Netflix, it's still $4 more than Disney+ and offers, in the parlance of the customer, jack shit in return, comparatively.
And yes, it's too easy to merely suggest that an Apple exec said out loud, "Maybe we should have bought a content company" when he or she first heard the Disney announcement, because of course they knew that months, if not years ago. Which makes you wonder if Apple is rolling the dice on the allure of its brand. Normally, that's a good bet when you have a shiny metal object to hold in your hand, but it's less of a good bet when a you're comparing the new, as-yet unseen Jennifer Aniston series to, say, 18 Pixar movies, all the old and new Star Wars stuff, all the Simpsons episodes and, is it really necessary to go on?
What Disney+ has is a laundry list of proven visual treats and Apple has a modicum of new material it didn't even bother showing clips of when the world was watching. It's too early to call that a knockout blow, but until Apple+ sets its price point it sure as hell looks like one.
Netflix, on the other hand, gets its most potent competitor, but remains very much still standing. Not that Amazon and Hulu aren't worthy competitors, because they are — and Disney owns Hulu as well, so the battle is on multiple fronts. Add WarnerMedia and Apple+ and Disney+ and you've got a Big Six in 2019 (and NBComcastixyfinity or whatever it will be in 2020), so Netflix will eventually feel the pinch, if not multiple pinches.
But Thursday's announcement only confirms what seemed obvious before — that Disney+ will be Netflix's biggest rival, but the $6.99 price point is an unexpected grenade. At the very least, that puts Disney+ in a high-velocity sprint toward Netflix-like domestic subscriber numbers. Because, as mentioned before, Disney+ was always a "here, take my money" slam-dunk proposition, but at that ridiculously low subscription rate, people will be handing their money over like it's on fire.
Weirdly, that's a benefit to Netflix as well. It's doubtful whether a significant number of loyal Netflix subscribers would have given up one for the other and now that possible number is decreased exponentially by the low Disney+ price. People will get both. After that, where does the soon-to-be-record number of cord cutters put its money? The bet remains either Amazon or Hulu or both and, as previously mentioned, don't sleep on WarnerMedia.
Where does that leave Apple? Crying in Cupertino? It might be too cocky for that. And it's certainly robust enough to counter with, "OK, well, if you're going with $6.99 then how does free sound?"
It won't, but it could, so it's hard to predict doom for a company that could also easily say, "All of our shows are free for three (or six) months and then they'll be $5.99," or something like that. And of course, Apple will offer up a sexy bundling plan to help offset the Disney discount. And yet, who doesn't want to know what a Disney+, ESPN+ and Hulu bundle will look like? Because it's probably going to look pretty damned enticing; Disney has no trouble separating people from their money in creative ways.
Again, Netflix is the market leader with a very big headstart and people were likely going to pay for both anyway. At the Disney+ price point, that's almost a guarantee. So Netflix doesn't really suffer. (That said, if budget-conscious folks find that they want to combine Disney+ and ESPN+ and Hulu and that final total is close to the Netflix monthly nut, yeah, there's going to be some pain at Netflix as well.)
Amazon has invested tons of money in original programming and is doing a very good job — plus it has that two-day shipping thing. Still, it will have to stay on its game. Same with Hulu — member of the family or not. But the bet here is Disney's biggest bite is going to come out of Apple.
That sound you heard wasn't just the market tightening — everybody is clenching.
This emerging Streaming Wars story is getting good. It's getting interesting and really competitive.