Disney announced during a presentation for investors on April 11, that the service will launch on November 12 in the United States with a monthly price of $6.99 - which is cheaper than competitors Netflix, Hulu and Amazon.
Shares of Netflix traded down about 1 per cent at US$355.02 after-the-bell, paring losses following a deeper sell-off just after the results were released.
"What's making investors nervous is that there are signs of a slowdown in the second-quarter subscriber growth", said Haris Anwar, senior analyst at Investing.com.
Disney may have prompted concerns about Netflix's viability with a new streaming service. But the company's record numbers this quarter show just how much of a global powerhouse it is, and what competitors like Disney and Apple are up against. "While other services may carve out valuable add-on positions, we do not expect the launch of new services from Apple, Disney, AT&T or others to meaningfully impact Netflix's subscriber results over the next year", he said.
As the cheapest plan for mobile-only subscription is not available to U.S. consumers, Netflix is seeking to boost its presence in Korea amid growing competition in the streaming service market.
Competition is only mounting for the streaming giant. "We think that they'll be important to adding members in India" chief product officer Greg Peters said during the company's earnings conference call.
The $6.99-a-month Disney+ will offer content from the company's Marvel, Pixar and Star Wars franchises.
Netflix said in its letter to shareholders that it doesn't "anticipate that these new entrants will materially affect our growth" because transitioning from "linear to on demand entertainment is so massive" and "because of the differing nature of our content offerings". The monthly payment for the basic plan is as low as 6,500 won ($5.70) when consumers limit the use of service to mobile devices.
Netflix said that for the first three months of the year, profits rose to $344m compared to the same period last year, with sales up 22% to $4.5bn.
Additionally, Disney+ announced that all 30 seasons of The Simpsons will be available on the service on day one. Hulu, which is controlled by Disney, Comcast, and AT&T, had 25 million United States subscribers in 2018. Netflix this month implemented price hikes in most of the countries in which it operates, testing customer loyalty, particularly as new services enter the streaming business at bargain prices.
The company burned through $3 billion in 2018 to pay for hit originals such as "Birdbox" and "Ozark". The company is working on projects with some of the biggest names in Hollywood, including Oprah Winfrey, Reese Witherspoon and Steven Spielberg.
"We'll see what the right mix of features is, because there is a bit of a magic to try and get the right set of features at the right price point in a way that the consumer can relate to, right, it has to be sort of natural and intuitive to the consumer that this is what they're getting".