Walt Disney Co (NYSE: DIS) shares are up 15 percent since the company announced it would be launching its new $6.99-per-month Disney+ streaming service starting in November. Disney+ will focus on providing family friendly content and will be undercutting the price of the standard Netflix, Inc. (NASDAQ: NFLX) by nearly 50 percent.
Netflix shares are up 2.7 percent since Disney’s announcement, suggesting investors aren’t too concerned about Disney+. A new survey by Streaming Observer suggests they should be.
A random survey of 602 current Netflix subscribers found that 14.5 percent of Netflix users are considering dropping their Netflix subscription in favor of Disney+. If Netflix loses 14.5 percent of its current subscriber base, nearly 9 million Netflix customers could defect to Disney+ by the end of the year. A defection that large would represent an estimated $116.9 million in lost revenue for Netflix on a monthly basis.
It’s not the first time Netflix customers have indicated they may dump the service. In 2017, nearly 20 percent of Netflix users told Streaming Observer they were considering dropping their subscription after Disney pulled its content from the platform. In reality, very few actually followed through with that threat. Of course, at the time, the Disney+ alternative wasn't available for Netflix customers.
What may be more troubling to Netflix investors is that 2.2 percent of survey respondents indicated they're definitely canceling their Netflix subscription in favor of Disney+. Even if none of the subscribers in the “considering” camp actually leave, losing 2.2 percent of Netflix’s U.S. subscribers would cost the company 1.3 million users.
In addition about 20 percent of current Netflix subscribers indicated they plan on initially subscribing to both services. That gives Disney a foot in the door to potentially win over Netflix customers with a more affordable service.
The Streaming Observer survey also suggests Disney may have hit a home run by making Disney+ family friendly. Netflix users with children in the household are twice as likely to be considering or committing to cancelling their subscriptions in favor of Disney+.
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