Netflix should certainly feel threatened by Disney+

0
69

From November, Disney’s streaming service will offer the best of its extensive library at a knock-down price. Disney+ will not only be the home of the studio’s blue-chip movies, but also host a number of exclusive TV series and pictures. For most households, the $7-per month will just about squeeze into the budget, but what does this mean for Netflix?

Disney+ will be the biggest competition Netflix has seen since Amazon Prime. Disney’s strategy seems fairly simple, though: Catch Netflix in a pincer maneuver. Disney+ will hosts family-friendly and educational content parents will love, while Hulu, like Buena Vista and Miramax before it, will become Disney’s repository for material it doesn’t want its name on. Disney is hoping to score around 90 million subscribers by 2024, a conservative target given that Netflix currently has 139 million.

Now, Netflix has some intrinsic brand value, and its name alone has become a euphemism for one way to spend an evening. But it’s not on the same level of Disney — a studio and institution that’s existed for most of the last century.

Beyond the draw of the name, Disney has a number of beloved characters, from Mickey Mouse to Anna and Elsa, not to mention third-party studios, from Marvel to Lucasfilm, that have their own devoted, global fanbases.

On top of that, Disney told investors this week that it is committed to losing money on Disney+ until 2024. Now, Netflix is profitable and made $133.9 million in the last quarter, but it does not have the financial muscle to fight Disney in a war of attrition.

Netflix is only profitable if you ignore the $10.4 billion of debt it has accrued to buy the glitzy TV shows and movies it shows off. When that debt is due, Netflix will need to get much bigger or wring more cash out of existing users.

At $21 billion, Disney’s debt pile is more than double that of Netflix’s, but the former is a super conglomerate. If Disney’s movies go through a rough patch, it can lean back on its theme parks, sports and merchandising arms to help it out. To put Disney’s financial might into perspective, its video game and merchandise division alone made more money ($1.7B) in 2017 than Netflix did in the whole of 2018 ($1.6B).

Read more…

LEAVE A REPLY

Please enter your comment!
Please enter your name here