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Roku shares drop 12% after Apple introduces subscription TV service at surprisingly low price

Key Points
  • Shares of Roku dropped more than 12% Tuesday. The company suffered its steepest drop since March.
  • Netflix shares also took a dive on Tuesday after Apple said its original TV service will cost $4.99 a month and launch Nov. 1.
  • Netflix's monthly subscriptions start at $8.99 a month and go up from there.
A video sign displays the logo for Roku Inc, a Fox-backed video streaming firm, in Times Square after the company's IPO at the Nasdaq Market in New York, U.S., September 28, 2017.
Brendan McDermid | Reuters

Shares of Roku fell more than 12% on Tuesday after Apple announced that its subscription TV service will launch in November and will be free for a year for customers who buy a Mac, iPhone or Apple TV. Netflix shares fell more than 3%

Roku, which makes a streaming device and supports its own channel as well as services from Netflix, Amazon and many others, suffered its steepest decline since March.

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Apple TV+ to cost $4.99/month

Apple's streaming product, Apple TV+, was expected, but consumers didn't know how much they would be paying. CEO Tim Cook said Tuesday during the company's annual launch event that the ad-free service will cost $4.99 a month for the whole family. Providing original content via subscription is the company's latest effort to bolster its services business as iPhone sales slow.

Netflix raised the price of subscriptions in January. It now starts at $8.99 a month. The most popular offering costs $12.99, and its premium plan is $13.99. The announcement from Apple comes two months after Netflix's earnings report showed a rare loss in U.S. subscribers and a big miss on new international subscriptions. The stock is now down 18% over the past year.

Disney, whose Disney+ service will cost $6.99 a month, also dropped close to 3%.

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