UPDATE: Disney to charge 'substantially' less than Netflix for streaming, plans new 'Star Wars' content

11/11/17 10:20 AM EST

By Max A. Cherney

New 'Star Wars' live-action show, along with Pixar and Marvel series, planned for Disney-branded streaming service

Walt Disney Co. plans to charge "substantially" less for its yet-to-launch streaming service than Netflix Inc. at the beginning, and will develop a new "Star Wars" live-action TV show along with other properties for subscribers.

After releasing fiscal fourth-quarter earnings Thursday afternoon, Disney (DIS) Chief Executive Robert Iger said that the forthcoming streaming service will have less programming than Netflix when it launches and as a result be considerably cheaper than the $10.99 Netflix Inc. (NFLX) charges for its standard tier of streaming service.

"I can say that our plan on the Disney side is to price this substantially below where Netflix is," Iger said. "That is in part reflective of the fact that we'll have substantially less volume."

See:Disney restores screening access to LA Times following backlash and media boycott (http://www.marketwatch.com/story/disney-la-times-dispute-escalates-as-critics-ban-disney-films-from-awards-consideration-2017-11-07)

Much as Netflix has increased its subscription price over time, however, Iger said that the cost will rise as the amount of content offered increases.

"We see a Disney customer base out there that we're going seek to attract with pricing that is in line with the balance, the quality of the brand and franchises that are in there that also takes into account the volume. That will give us an opportunity to grow in volume and to have the pricing over time reflect the added volume as this product ages."

The CEO's comments mean the streaming service will also be priced well below the $14.99 Time Warner Inc. (TWX) unit HBO charges for its streaming service. Hulu, of which Disney owns a stake, charges $7.99 a month for its service with ads and $12.99 with no ads.

On the Thursday call with analysts, Iger said that said that though there has been "a lot written about whether this is aimed at being a Netflix killer," Disney is simply aiming to be a "viable player in the direct-to-consumer space." The company plans to roll out the Disney-branded streaming service in the second half of 2019, he said.

As for new original content for the service, Iger said that Disney plans to roll out new TV series based on some of its most popular properties, like Marvel, Pixar and Lucasfilm, to pair with its library of movies and TV shows it already owns. Specifically, Iger said Disney would produce a live-action "Star Wars" television series, as well as one based on Pixar's "Monsters, Inc." movies, a "High School Musical" series and a Marvel series.

The new TV show wasn't the only "Star Wars" news Disney announced Thursday. The company said Rian Johnson, who directed the coming film "Star Wars: The Last Jedi," is set to create a new trilogy of Star Wars films, and write and direct the first in the series. According to the company (http://www.marketwatch.com/story/disney-announces-new-star-wars-trilogy-2017-11-09), the new films will be separate from the Skywalker-themed saga that has been the core of the three "Star Wars" trilogies so far, and introduce new characters from a "corner of the galaxy that 'Star Wars' lore has never before explored."

As part of Disney's push to develop tech to stream its shows and programs directly to customers--instead of via third-parties such as Netflix--the company also plans to launch an independent ESPN streaming service in 2018. On the earnings call, Iger said that the company will offer a plan called ESPN Plus, which will include events not airing on regular ESPN cable channels.

Don't miss:What the ESPN streaming service will offer (http://www.marketwatch.com/story/what-the-espn-streaming-service-will-look-like-2017-08-08)

Disney plans to offer two pricing plans for the streaming service: a cheaper rate for those with a cable bundle, and a more expensive price for users without cable service. Only those who sign into the app with cable credentials will be able to access streaming sports that are airing on ESPN or ABC properties, however.

Disney stock dropped 3% in late trading Thursday after the company released its fiscal fourth-quarter results (http://www.marketwatch.com/story/disney-stock-falls-on-earnings-revenue-miss-2017-11-09), but then took back those losses after the series of announcements beyond fourth-quarter financial performance. The stock was up 0.3% in premarket trde Friday. Disney shares have dropped about 1% this year, with the S&P 500 rising 16% and the Dow Jones Industrial Average up 19%..

-Max A. Cherney; 415-439-6400; AskNewswires@dowjones.com

 

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11-11-17 1020ET

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