Netflix Not Sweating Over Disney Plus, Analysts See Low Risk
Walt Disney Co. reported impressive subscriber numbers for its new Disney+ streaming service launched November last year – but Netflix isn’t sweating.
On Wednesday, analysts said Disney+ was not a competitive risk that it may appear to be for Netflix Inc.
While there were notable takeaways for Netflix in Disney’s report, the ‘positive outweighs the negative,’ BofA analyst Nat Schindler wrote, reiterating his buy rating and $426 price target on the stock.
Even with this emerging high-profile competition from Disney+, ‘Netflix remains the OTT staple,’ the firm wrote, referring to over-the-top streaming services.
Shares of Netflix rose 1.7 per cent on Wednesday, while Disney fell down to 2.2 per cent.
Additionally, since Disney+ debuted late last year, Netflix shares have easily outperformed Disney.
‘It is clear Disney+ engagement trails that of Netflix and this reinforces our view that Disney+ is not a substitute,’ BofA wrote, adding that viewing hours from Disney+ subscriber ‘widely trail those of Netflix.’
This disparity in engagement figures could continue as Disney’s most high-profile streaming releases for 2020, including Marvel programs and the second season of ‘The Mandalorian,’ are ‘clustered’ in the fall and fourth quarter of the year.
‘This limits Netflix’s competition from a content perspective,’ BofA stated.
BofA also said that Disney’s international rollout of Hulu was not likely to commence until next year. This is an ‘incremental positive’ for Netflix’s international growth, since ‘Disney’s limited ability to offer a bundle overseas for now.’
While Disney+ is on an ‘exemplary start’ and the risk Netflix faces from its competition is likely to be debated, ‘we prefer to take a page from “Frozen” and “Let it go”,’ analyst Justin Patterson wrote to his clients, Bloomberg reports.
He also said that Disney’s results reinforce the idea that streaming services can exist alongside each other, and that traditional cable TV is the sector that’s struggling.