Will Disney Beat Netflix?

When Disney released its Disney+ video streaming service, it became one of Netflix’s competitors. Will Disney beat Netflix? The answer depends on several factors. At the moment, Netflix and Disney+ have pros and cons that give them advantages over each other.

Here’s how both Netflix and Disney+ could pull ahead to become the dominant streaming service for movies and TV series.

Netflix Owned Streaming Video For Years

In 2007, Netflix (NFLX) started giving its members the option to stream a select number of movies. For years before that, the company had grown its brand recognition by shipping DVDs via USPS to members. The low subscription cost, convenience, and large library made it an interesting service that attracted a lot of people.

When people think of streaming movies, they still think of opening the Netflix app and finding titles that interest them. YouTube and Hulu managed to start streaming content around the same time. They did not have the option to stream feature movies, though, so they trailed behind Netflix.

Some people have been subscribers since 2007 and before. They have developed a loyal following. As a result, companies like Disney (DIS) will have a hard time changing existing consumer habits. However, Disney does have assets that Netflix cannot match: a mile-deep list of titles aimed at kids and billion dollar brand-name hits like Star Wars.

How Fast Has Disney Acquired 100M Subscribers?

From Q1 2020 to when it had 26 million subscribers to Q2 2021, Disney grew at a very fast pace. In those 5 quarters, Disney+ reached 100 million subscribers.

While still half the number of subscribers that Netflix has, one cannot ignore how quickly Disney acquired its members. Within barely more than a year, Disney managed to attract the number of viewers that it took Netflix a decade to collect.

Of course, Netflix had a much steeper hill to climb since it had to convince consumers that streaming platforms were worth trying. Disney+ benefits from Netflix’s hard work in tech development and marketing.

What Does Disney’s Fast Growth Mean For Netflix?

While Disney doesn’t have nearly as many subscribers as Netflix, its membership numbers have grown incredibly quickly. This could mean a couple of things regarding its competition with Netflix.

On the one hand, Disney’s fast growth might not mean anything. A lot of people were going to sign up for Disney+ because the company has such a large library of content.

Disney+ also didn’t need to take a long time building its subscriber base because consumers already knew what to expect from online video streaming services. Netflix had laid the foundation. Disney+ just built on top of it.

On the other hand, Disney’s rapid growth could put Netflix’s future in peril. Right now, it’s easy to imagine that streaming services share a lot of customers.

Households don’t mind paying for access to multiple platforms as long as prices stay low and they get to access the content they want. At some point, though, people may look closer at their budgets and decide that they need to reduce the amount of money they spend on entertainment.

When choosing between Netflix and Disney+, some households will choose Netflix. Others will go with Disney. Let’s look at some of Disney’s advantages to see why more people might choose it over Netflix.

What Advantages Does Disney Have Over Netflix?

Disney’s library gives it an obvious advantage over Netflix. Netflix licenses a lot of good content that people want to watch. It has also collaborated successfully with other production companies to make original series and movies. Many new movies that come out on Netflix, however, probably wouldn’t make much money in a theater.

Disney, however, can include blockbusters that it, Pixar, Lucasfilm (Star Wars), Touchstone, Marvel, and other production companies owned by Disney.

Disney also has a lower price that will appeal to some households. You can get a Netflix subscription for $8.99 per month. That membership level only lets you stream on one device at a time.

A Disney membership that costs $6.99 per month lets you stream on up to four devices at once, which makes it perfect for parents and children. You would have to pay $15.99 to stream Netflix on four devices.

Finally, Disney has extremely deep pockets. With revenue coming from theme parts, major motion pictures, and retail items, Disney can afford to offer consumers more services at lower prices. Even if the company loses money on most memberships, it could hold out for years while it waits for Netflix to falter.

Can Netflix Fend Off The Challenge From Disney?

Netflix can probably fend off the challenge from Disney, but it will take a lot of effort. The service benefits from its reputation. Practically everyone knows what Netflix is. Disney+ isn’t as familiar, yet.

Coming out on top, though, will probably rely on producing exclusive content that viewers feel that they cannot miss.

Netflix must create a sense of cultural urgency. Creating another hit like Stranger Things would help a lot.

The question is whether Netflix can choose series and movies that will draw long-term attention. As a production studio, Netflix already has a reputation for giving up on some of its best content before giving titles more than a season or two to prove themselves.

Will Original Content Costs Doom Netflix?

There is a chance that Netflix simply cannot afford to produce the original content it needs to beat competitors like Disney+. Netflix started as a distribution company. Now, it has also become a production studio. Disney took the opposite approach, which means it already has thousands of titles subscribers want to view.

If the cost of original content forces Netflix to raise its prices, it could soon find itself unable to maintain subscribers looking for alternative streaming services. Will Disney beat Netflix? That might depend on how well Netflix adapts to changes in the industry.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.