Wall Street is ambivalent on Netflix Inc (NASDAQ: NFLX) as more and more streaming rivals emerge. One of its opponents is proving itself increasingly formidable.
Where Disney+ Stands
In its first three months, Walt Disney Co's (NYSE: DIS) Disney+ gained 28.6 million subscribers. During the same period, the company’s ESPN+ subscriptions nearly doubled from 3.5 million to 6.6 million, and its majority-owned Hulu grew to 30.4 million subscriptions.
Comparatively, Netflix has 167 million subscribers, Amazon.com's (NASDAQ: AMZN) Amazon Prime 150 million, ViacomCBS Inc's (NASDAQ: VIAC) CBS All Access + Showtime 10 million, and AT&T Inc.'s (NYSE: T) HBO Now 8 million.
Where Disney's Stock Could Go
With most peers, Disney can compete, and its lead platform has barely had time to prove itself.
While Hulu has been relatively slow to grow in its eight years, Disney+ shows greater promise. It took Netflix years to build the subscription tally that Disney+ started out with. HBO Now subscriptions don’t even compare with Disney+. Amazon Prime got its start with similar metrics and then generally matched pace with Netflix’s growth.
Essentially, Disney has already claimed a head start on most companies, and it could follow the sharp trajectory of Prime.
Disney’s Growth Efforts
To up the competition and catalyze further growth, Disney has invested big in its original content and licensing. In the last quarter of 2019 — the first quarter of Disney+ — the company increased its direct-to-consumer operating loss from $136 million to $693 million, even while quadrupling its segment revenue. Management anticipates a $900 million segment loss next quarter, during which Disney+ will debut in India and Hulu will go global.
Notably, Disney originally projected 60 million to 90 million subscriptions by the end of 2024, and it did not update that guidance in its most recent earnings report.
Why BofA Says Disney+ Numbers Are A Positive For Netflix
For Netflix, Getting (And Keeping) Subscribers In The Face Of Competition Is Expensive
Photo courtesy of Disney.
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