Netflix vs Disney – Intense rivalry among streaming services

NFLX declared that in addition to the current ads-free basic, standard, and premium plans, it would create a new subscription plan that would be ad-supported and more affordable. The user who is price sensitive can continue with this subscription. Even the CTV advertising spending in the US is anticipated to be $17.8bn and $27.5bn for FY22 and FY23, respectively.

In my opinion, NFLX has a huge opportunity ahead of it given that it is anticipated that advertising spending will increase significantly over the following few years. NFLX, which has improved its offering continuously, has risen to the top spot in US TV viewing minutes with 1.33 billion viewing minutes, demonstrating the ability to increase engagement. NFLX anticipated a net loss of 2 million subscribers in Q2FY22, as opposed to the 0.96 million it actually reported.

In this chaotic situation, this is encouraging for the company because slower revenue growth and margin pressure were hurting the business more than subscriber loss, which was the only bright spot. Coming to Disney’s upcoming content such as Avatar: The Way of Water, Black Panther: Wakanda Forever Thor: Love and Thunder, and Obi-Wan Kenobi, DIS had over 205mn subscribers overall and gained subscribers at a faster rate. Furthermore, Disney owns the sports telecast rights, allowing it to stream live sports on its platforms and generate advertising revenue.

Because of the popularity of sports and the content they provide DIS is gaining more market share. On the other hand, NFLX focuses on developing regional content that will become popular and help them gain subscribers, but the industry leader is currently going through a rough patch. Competitors have the chance to seize the market, which Disney+ is unquestionably doing. NFLX’s decision to switch to an ad-supported model will add colors to the topline in the long run. 

By Subhendu Behera

Subhendu Behera is an Equity Research Analyst at CrispIdea and covers Internet based services and CPE sector.

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