Date: 18 April, 2019 - Blog
Friday, the share price of Disney rose by 11.5% and that of Netflix fell by 4.5%. Disney+, Disney’s streaming TV, has announced the price of $6.99 for the monthly subscription starting in November with the flagship products Marvel and Star Wars, a price lower than the competition. Disney+ will instead address young people and families.
Apple has also announced its streaming TV service, Apple TV+. The undisputed world #1 is by far Netflix with 140 million subscribers, followed by Amazon Prime with 100 million subscribers and Hulu with 25 million subscribers. Disney+ hopes to reach between 60 and 90 million subscribers within 5 years. But Disney has become the majority shareholder of Hulu (60%) since the acquisition of Fox and will have to develop separate strategies between Disney+ and Hulu.
Competition increases, but entering into the streaming TV is excessively expensive. NBCUniversal will launch a streaming TV in 2020. Comcast has announced that it is not going to rush into this segment which represents an economic challenge. Will HBO be able to support the efforts of WarnerMedia (HBO belongs to WarnerMedia, which itself belongs to AT&T) in streaming? Will the consumer pay for the CBS Showtime (8 million subscribers)? And we do not know how much Apple TV will spend.
New streaming TV services will weaken existing ones. But technology groups like Netflix are more agile than traditional brands like Disney. Disney will have to manage movies that are released in cinemas. Netflix will keep its advantage for a while, because thanks to powerful algorithms, Netflix has a fine knowledge of the tastes of consumers, allowing to conceive original contents.
The great strength of Netflix and Amazon is the content, while the others are based on the catalog. So, for the moment, not too much worry for the two undisputed leaders, Netflix and Amazon, who spent $ 12 billion and $ 6 billion on content and marketing in 2018, far ahead of the followers.
Netflix is not at risk yet. Its large number of subscribers allows it to invest a lot of money in the content, unlike the others, even Disney. In 2019, Netflix is expected to spend $ 15 billion in content and marketing against $ 1 billion for Disney.
- Disney+ is not an alternative to Netflix. In streaming TV, Netflix remains the undisputed leader. Netflix remains a buy with a valuation at $450
