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Disney+ To Topple Giants Of Online Streaming

By Zacks Investment ResearchStock MarketsAug 09, 2019 08:20AM ET
www.investing.com/analysis/disney-to-topple-giants-of-online-streaming-200453570
Disney+ To Topple Giants Of Online Streaming
By Zacks Investment Research   |  Aug 09, 2019 08:20AM ET
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The Walt Disney Company (NYSE:DIS) is set to take a big leap next quarter, stepping into the highly saturated online streaming market with Disney+. The company has already teased viewers with a list of series set to premiere on Disney+ that have caught the attention of the Marvel-Pixar fan base.

With the mightiest superheroes boosting Disney’s box office collection in 2019, it is quite likely that a repeat performance could be expected when Disney+ launches on Nov 12.

Disney Steps Into Online Streaming

With the rise of cord-cutters, a shift in the method of media consumption is taking place. Family-friendly entertainment producer Disney is also evolving to stay in the market. Disney launched ESPN+ to stream live sports last year. After the acquisition of Fox, Disney now has a majority stake in Hulu, which gives it access to a range of past and current television shows and Hulu originals. Next quarter, Disney intends to launch Disney+ at $6.99 a month and a Disney+, ESPN+ and Hulu bundle for $12.99 a month.

Disney is banking on its latest box office hits to attract subscribers, who can enjoy all these releases on-demand at Disney+. At the 2019 Comicon, Marvel president Kevin Feige announced that Loki, Wanda-Vision and Hawkeye were among the series to be launched exclusively on Disney+. Disney’s CEO Bob Iger also said on the last earnings call that Disney will reboot Home Alone, Night at the Museum, Cheaper by the Dozen, and Diary of a Wimpy.

Disney aims to attract 12 million subscribers by 2020 end, which is around 20% of Netflix’s (NASDAQ:NFLX) total subscriber base. Hulu’s deep, high-quality library and new original content will not only give Disney a boost in the United States, but also boost demand for its new service in the international market.

Netflix Loses Its Grip

Netflix dominated the online streaming market for a decade with nearly 150 million subscribers. But in July 2019, the company lost paid subscribers in the domestic market for the first time in eight years, likely a result of a hike in subscription prices.

Netflix’s basic streaming plan starts at $8.99 for a month, whereas a Disney+ monthly pack comes for $6.99. As Netflix boasts having the deepest library at present, Disney with its Disney+, ESPN+ and Hulu bundle may easily surpass Netflix's content count. Netflix’s subscription price is still higher compared to Disney’s bundle offer at $12.99 per month.

Moreover, Netflix lost substantial viewers after it canceled future production and streaming of Marvel’s Iron Fist, Luke Cage and other related series in 2018. On the other hand, it has to give up its most popular shows like Friends and The Office, as new rivals reclaim their content. Soon, BBC might also reclaim their content from Netflix as it launches Britbox.

Disney+ is the New Lion

Amazon, Inc.’s (NASDAQ:AMZN) Amazon Prime Video, AT&T, Inc.’s (NYSE:T) AT&T Now, CBS All Access, Sling TV and HBO Now are other key streaming players. The major drawbacks of these platforms are limited content, in-escapable in-video advertisements and high subscription costs. Moreover, these brands are not globally available with limited accessibility. Disney plans to take advantage of its international recognition and availability to capture the market.

Banking on Hulu’s vast library and the timelessness of sports from ESPN+, Disney’s streaming bundle is well positioned to offer both price and quality competition in the online streaming market.

Since Marvel, Pixar and Fox content will be exclusively screened on Disney+, no other streaming platform can broadcast these movies and series without paying Disney a hefty fee. The popularity of all these three brands internationally is too high. With its low pricing structure, Disney will likely emerge a winner.

Disney, Netflix, Amazon and AT&T shares have gained 25.8%, 18%, 22% and 21%, respectively, on a year-to-date basis. Each of these stocks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Conclusion

Disney+ will have major attractions from Disney’s fan favorites Marvel, Pixar and Fox. On the other hand, Netflix has to face major competitors, Warner and NBC, who have Friends and The Office as all-time crowd catchers. However, Disney+ is about to give stiff competition to all the streaming companies in 2020, as it has scheduled exclusive content to be launched on Disney+ solely.

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The Walt Disney Company (DIS): Free Stock Analysis Report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Netflix, Inc. (NFLX): Free Stock Analysis Report

AT&T Inc. (T): Free Stock Analysis Report

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Zacks Investment Research
Disney+ To Topple Giants Of Online Streaming
 
Disney+ To Topple Giants Of Online Streaming

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