Disney Already Lost $1 Billion On Streaming Before Launching Its Netflix Competitor, Losses Expected To Grow

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Disney has had a rocky entrance into the streaming marketplace — even before actually entering it.

A report from CNBC noted that the media company has already lost $1 billion in the streaming marketplace in the recently ended fiscal year, all before Disney actually launches its streaming competitor to Netflix later this year. As the report noted, the losses are expected to continue rising as the new service is launched and new investments are made.

The losses were not unexpected, with BTIG analyst Rich Greenfield saying that it is a given that Disney will be losing money in the earliest days of the venture as they try to take on established streaming giants like Hulu and Netflix.

“Streaming requires a strong stomach for losses, especially as you are playing catch-up,” Greenfield told CNBC.

There are also high costs associated with streaming services, especially amid the increased demand from consumers for original content. As the report noted, Netflix is expected to spend more than $10 billion in 2019 on its original movies and shows.

The increased demand for content has led to raising prices across the industry. Netflix just introduced the biggest price hikes in its history, with prices raising between 13 percent and 18 percent depending on the plan. As the Motley Fool reported, that came at the same time that Amazon raised its prices for Amazon Prime to $119 per year from a previous price of $99 per year.

As the report noted, Netflix has justified the price hikes by pointing to the huge amount of original content being offered to customers.

“Netflix feels justified in raising prices by $1 to $2 regularly because it believes it’s earned that extra change with the increasing quality and quantity of its content library, Netflix’s chief product officer, Greg Peters, said on the latest earnings call in October. Last year, Netflix released 700 shows and films on its platform,” the report noted.

The marketplace is also growing more crowded, with more media companies offering streaming services, including an upcoming one from NBC.

Disney had announced this week that its new streaming service will first be introduced on April 11, according to a Bloomberg report. The details surrounding the service are still shaping out, though Investor’s Business Daily reported that it will include original movies and television shows from Marvel, Pixar, Lucasfilm, and other brands. There is little yet known about what titles could be introduced or what original programming will come with the service being called “Disneyflix” by industry insiders.