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Disney Vs. Netflix: The Content War Begins

Jun. 03, 2019 2:56 PM ETDIS, NFLX, AMZN, APPL, PARA, CMCSA10 Comments
Crispus Nyaga profile picture
Crispus Nyaga
3.42K Followers

Summary

  • Netflix and Disney are two of the biggest media companies in the world.
  • Fears of Netflix losing users to competitors are overblown.
  • I explain why I am long the two companies.

Introduction

In recent years, investors in the media industry have focused on the disruption brought about by Netflix (NFLX). The company has continued to grow and attracted foes both in media and in the telecommunication industry. AT&T has acquired Warner Media to expand its streaming business while Comcast (CMCSA) launched Xfinity Flex last year and is expected to launch a free ad-supported streaming service next year.. Apple (APPL) is building its subscription service that will feature big stars like Oprah and Steven Spielberg. CBS (CBS) All Access has been around since 2014 while Amazon (AMZN) has Prime Video. While all these companies have their strengths in the media industry, none matches the might of Walt Disney (DIS), which owns Hulu and plans to launch its Disney+ in November. This article will compare Disney and Netflix and conclude with one that makes a good investment.

The Companies

In terms of operations, Netflix has one of the simplest business models in corporate America. The company licenses movies and series from other studios like Disney and Warner. It also spends billions of dollars every year in producing its own Netflix Originals like Master of None, The Patriot Act, and Chewing Gum. It then makes money from the money subscribers pay every month. In the US, this price ranges from $10.99 to $15.99 per month. In the most recent quarter, the company has more than 148.8 million global members. Of these, 60.2 million are from the US. In the quarter, the company had revenues of more than $4.52 billion. It now has a market capitalization of more than $150 billion and more than 7,100 employees.

Disney, on the other hand, is a more diverse company that makes money from tens of places. In 2018, the company made more than $59 billion from its four segments.

This article was written by

Crispus Nyaga profile picture
3.42K Followers
I am a financial analyst specializing in technology, consumer, and industrial stocks. I operate a private office in Nairobi that invests in American and European equities. I am also the founder of macrostreet.com, a financial media platform. Fellow contributors, Stella Mwende, Norah Chebett, Willy David Ndege, and Aurelia Kangangi are my friends.

Analyst’s Disclosure: I am/we are long DIS, NFLX. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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DIS--
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AMZN--
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PARA--
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