Netflix: Is Disney A Threat?

Mar. 15, 2019 11:30 AM ETNetflix, Inc. (NFLX)DIS97 Comments

Summary

  • Disney will be launching their streaming service later this year.
  • Take a look at the competitive landscape.
  • I weigh the impact that Disney's new service will have on Netflix.
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Netflix (NASDAQ:NFLX) has achieved multiple years of strong revenue and subscriber growth. Now, the company will face new competition from Disney's (DIS) new streaming service, called Disney+, which is set to launch in late 2019. I will explain why I don't think the new Disney streaming business will significantly impact Netflix's business.

I will also take a look at the investment outlook for both companies. Frankly, I don't think this is a winner take all situation. Consumers will purchase subscriptions for the content that their families enjoy the most.

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Disney+ Content Being Offered

Currently, Disney's content is streamed on Netflix. However, Disney is pulling its content from Netflix for its own streaming service. Disney was receiving $150 million per year from Netflix in a licensing deal.

The Disney+ streaming service will have all Disney's classic movies. It will also have the Star Wars, Pixar, National Geographic, and Marvel content. The service will also have Disney's new movies after they run their course in theaters.

After the completion of the Twenty-First Century Fox (FOXA) acquisition, Disney+ will also feature Fox content such as The Simpsons, Avatar, and X-Men. The acquisition completion is expected to be completed soon, probably before the launch of Disney+.

Disney does have a large amount of family-oriented content. So, I think families with young children will be quick to get subscriptions to the service. A survey by Raymond James shows that 24% of respondents are either very likely or moderately likely to subscribe to Disney+. This is projected to amount to about 16 million subscribers for annual revenue of over $1.1 billion.

Disney CEO, Bob Iger, stated that Disney+ will be priced below Netflix. That will be an attractive price point and one that can be affordable for many families to treat Disney+ as an add-on streaming service.

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This article was written by

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David focuses on growth & momentum stocks that are reasonably priced and likely to outperform the market over the long-term. He is a long term investor of quality stocks and uses options for strategy.

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Disclosure: I am/we are long DIS, ARKW, AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The article is for informational purposes only (not a solicitation to buy or sell stocks). David is not a registered investment adviser. Kirk Spano is an RIA. Investors should do their own research or consult a financial adviser to determine what investments are appropriate for their individual situation. This article expresses my opinions and I cannot guarantee that the information/results will be accurate. Investing in stocks involves risk and could result in losses.

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