Disney Streaming Service Could Outgrow Netflix

March 11, 2019
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Disney (NYSE: DIS) online media streaming service is yet to enter the market, but some analysts believe it could outgrow Netflix in a short time. The service, branded as Disney+, is set to launch at the end of this year in the United States. Other territories will follow in 2020.

Netflix currently has almost 140 million subscribers around the world, a number which could be surpassed by the company as its own service matures.

160 Million Subscribers According to J.P. Morgan

Alexia Quadrani, a top J.P. Morgan analyst told investors recently that Disney+ could attract up to 160 million subscribers by the time it is rolled out to all major international markets.

As of today, Netflix has just over 139 million subscribers. It launched its streaming service in 2007.

The analyst believes that the strength will come from existing brand recognition. In a written report in March, she said that “While there is little question that there are more direct-to-consumer services today than ultimately should survive, we have no doubt that it remains on the short list of products that should prevail longer-term.”

Quadrani cited Disney’s “Unmatched brand recognition, extensive premium content, and unparalleled ecosystem to market the service.”

The marketing reach is extensive, with global toy brands, film and television productions, and theme parks.

Disney also controls some of the most valuable franchises and studios of all time. These include Marvel, Star Wars, and Pixar Animation Studios. They would have the potential to ‘black out’ its content from other providers. This already seems to be occurring, as Disney owned properties have been cancelled or pulled from Netflix.

The company has almost 100 years of its own productions to pull content from, including some of the best loved and highest grossing animated feature films.

 Disney Compete at a Lower Price Point

Disney appears willing to cut profits to get a quick foothold in the streaming market. The company has already told investors and consumers that Disney+ will be offered for a price “substantially below” that of Netflix and other services. Netflix’s basic package is currently offered for $9 in the United States.

The public stock has grown 3.79% this year, significantly less than the benchmark growth of 9.15% on the NYSE Composite Index. The release of Disney+ later this year could provide a much welcome boost to stock.

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