- March will be a defining month for Netflix as Disney goes global.
- Walt Disney’s streaming is enjoying faster growth in the U.S. than Netflix in its early days.
- Disney’s strategy of “quantity over quality” may change the calculus in the online video streaming sector.
Walt Disney (NYSE: DIS) chairman and CEO Bob Iger described the media and entertainment giant’s Q1
as a “great quarter.”
For Netflix (NASDAQ: NFLX), Walt Disney’s quarterly report is something to worry about. In less than two months, the House of Mouse’s streaming service Disney garnered nearly million subscribers. It took Netflix half a decade to hit that figure.
Worse still for Netflix, Disney is just getting started.
Here are three reasons why Netflix’s quarter ending March could be the last one before obituaries start pouring in.
Disney Plus is launching internationally in March
Netflix has been witnessing slowing growth in the U.S. This is its most lucrative market where it obtains the highest average revenue per user. Healthy growth in foreign markets has compensated for the tepid growth in its home country though. But that too is now under threat as Disney is going global starting next month.
Starting March
Given Walt Disney’s aggressive pricing on its streaming service and its
Netflix could be upended in the U.S.
In Netflix’s most recent quarter, the number of subscribers in the U.S. and Canada totaled
Between Nov. and , Disney added . 5 million users. That’s a growth rate of roughly , 12 users per day.
By all accounts Disney looks set to exceed estimates handily. If the actual rate of growth remains constant throughout the quarter ending March , Disney could have at least million subscribers in the US by the end of that period. This would be just 19 million shy of Netflix’s total in both the US and Canada in a fraction of the time.
Netflix has prioritized quantity over quality and is constantly churning out new content at a huge cost. In (Netflix is expected to spend $ billion on original programming and expensive licensing deals. That’s an increase of over 66% from last year. Disney budgeted nearly $ 1 billion on original content .
On the flip side, Disney has prioritized fewer new high quality productions and the success is astounding so far. In other words, the Mouse has chosen to nimble away in sustainable fashion while Netflix has elected to chomp raising the risk of choking.
Worse still for Netflix, the strategy does not look feasible in the long-term given the streaming service’s cash woes. For the full-year that ended December , Netflix’s free cash flow hit negative $ 3.3 billion. Walt Disney, on the other hand, ended (with
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
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