Apple is finally taking on Netflix with its own streaming television service and, uncharacteristically for the company, offering it at a bargain price — $5 a month beginning Nov. 1.
Walt Disney Co. is launching its own assault on Netflix the same month, for $7.
It may be sheer coincidence that the cost of paying for Apple and Disney subscriptions combined still will be a dollar less than Netflix’s main plan, priced at $13 a month. But the intent to disrupt Netflix’s huge lead in the streaming business couldn’t be clearer.
The aggressive pricing is unusual for Apple, which typically charges a premium for products and services to burnish its brand. Most analysts expected Apple to charge $8 to $10 per month for the service, which will be called Apple TV Plus.
But Apple is entering a market that Netflix practically created in 2007 — around the same time as the first iPhone came out. And Netflix has amassed more than 150 million subscribers, meaning that Apple needed to make a splash.
“You have to expect they’re going to do something, considering how hypercompetitive the streaming video space is,” said Tim Hanlon, CEO of Vertere Group.
Netflix declined to comment. In the past, Netflix CEO Reed Hastings has depicted the increased competition as a positive for everyone.
Like Netflix and similar services from Amazon and Hulu, Apple has been spending billions of dollars for original programs. The service will launch with nine original shows and films, with more expected each month. It will only carry Apple’s original programming and will be available in 100 countries at launch.
Since it began focusing on exclusive shows and movies six years ago, Netflix has built a huge library of original programming and now spends upward of $10 billion annually on its lineup.
Disney, one of the most hallowed brands in entertainment, is also muscling its way into the market with a streaming service featuring its treasured vault of films and original programming.
That means both Apple and Disney will be undercutting the industry leaders. Besides Netflix, there is Amazon at $9 per month and Hulu at $6 per month.
The price war is unfolding as Netflix tries to bounce back from a rough spring in which it suffered its first quarterly drop in U.S. subscribers since 2011.
Each new entry into the crowded video subscription market stretches the limits of just how many monthly plans viewers are willing to pay for.
Apple’s pricing shows it is serious, and the company will probably take a loss “as it plays catch-up,” said Colin Gillis, director of research at Chatham Road Partners.