The right consumer price for future OTT platforms that compete with Netflix seems clear. Start lower. But what’s the marketing message?
Walt Disney’s plan for its upcoming subscription video-on-demand platform is one that in theory will directly compete with Netflix. Addressing this during Disney’s recent earnings phone call, Bob Iger, chairman/CEO of Disney, says the new service will be priced at “substantially less” than Netflix.
He did not go into detail, but he did explain the logic: The Disney service would have less overall TV/movie content than Netflix. Currently, Netflix's pricing is at $10.99 to $13.99 a month. There is also a basic "standard definition" plan at $7.99.
By way of comparison, Hulu costs $11.99 a month for its SVOD service (with no commercials) and $7.99 for its original service -- the one with limited commercials. CBS All Access, which also has TV commercials, is priced at $5.99 a month. Users can get a commercial-free option for $9.99.
So where will Disney fit in? A good guess might be at $9.99 or maybe $10.99 a month on average.
This will occur as consumers make the transition to these services from traditional pay TV -- which can range from $80 to $125 a month and more.
Then there is the marketing message. Will Disney position this as a Netflix killer -- or perhaps something more limited? The latter does not sound like a healthy marketing plan for a big media company, especially one positioned to be all things to all people.
For its part, Disney has many resources -- Pixar, Marvel and other big movie TV content production entities. So it's a different beast from Netflix, which started as a service acquiring TV and movies from major studios and other producers.
And while Netflix continues to spend tons of money -- $8 billion next year -- on original content, it still doesn’t have the extensive Disney library.
For the near term, Netflix is in the dominant position. But as other movie studios take more control of their programming for future digital services, that may change.
One UBS analyst suggests a Disney SVOD service would need 32 million global subscribers at $9 a month to break even. Right now, Netflix has over 100 million global subscribers.
So here's a marketing message for Disney: “Bottom line, we can give you a lot of TV and flicks, net for less. And we won’t mention their name.”