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Netflix lost as much as $8bn in market capitalisation in a few minutes of trading on Walt Disney’s news of its upcoming - and cheaper - rival streaming service.
Disney unveiled details of the service on Thursday after the close, saying it would launch November 12 at a price of $7 a month or $70 a year.
That undercuts Netflix, whose most popular US plan costs about $11 a month.
Netflix shares fell as much as 5% to $349.36 shortly after the open in New York Friday, sending its market as low as $152.5 billion.
Analysts have been sanguine about Netflix’s rising subscription prices, which haven’t seriously dented its 60 million-strong US customer base.
Still, the company has rarely faced a challenge like the deep-pocketed Disney, which is willing to lose money for years on Disney+ as it moves to grab market share.
Disney went the opposite way. Its shares jumped to a record high, adding as much as $25 billion in market value, for a total of about $235 billion.
The entertainment giant presented Disney+ on a sound stage used to make the original “Mary Poppins,” delivering an Apple-style presentation of the online product.
The service will live or die based on its content - and that’s where Disney made a big statement.
Disney+ will feature an arsenal of kid-friendly programming, including 13 classic animated movies, 21 Pixar features, original series, and material from its Marvel and Star Wars franchises.
