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| Last year, half of Americans aged 22 to 45 watched zero hours of cable TV. And almost 35 million households have quit cable in the past decade. All these people are moving to streaming services like Netflix (NFLX). Today, more than half of American households subscribe to a streaming service. |
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| The media calls this “cord cutting.” This trend is far more disruptive than most people understand. The downfall of cable is releasing billions in stock market wealth. Combined, America’s five biggest cable companies are worth over $750 billion. And most investors assume Netflix will claim the bulk of profits that cable leaves behind. So far, they’ve been right. Have you seen Netflix’s stock price? Holy cow. It has rocketed 8,300% since 2009, leaving even Amazon in the dust: |
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| But don’t let its past success fool you. Because Netflix is not the future of TV. Let me say that one more time… Netflix is not the future of TV. The problem is that no matter how much Netflix spends, it has no chance to catch up with its biggest rival… |
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| Disney Enters the Race In about 175 days, Disney is set to launch its own streaming service called Disney+. It’s going to charge $6.99/month—around $6 cheaper than Netflix. And it’s pulling all its content off of Netflix. This is a big deal. The Undisputed King of Content Disney owns Marvel, Pixar Animations, Star Wars, ESPN, National Geographic, Modern Family, and The Simpsons. Not to mention all the classic characters like Mickey Mouse and Donald Duck. In six of the past seven years, Disney has produced the world’s top-selling movie. Here’s a list of the five highest-earning movies of 2018: Avengers Infinity War Black Panther Jurassic World: Fallen Kingdom Incredibles 2 Bohemian Rhapsody All except Jurassic World are Disney productions. Clearly, Disney is king of the blockbuster. Over the past six years, its average film has raked in $1.2 billion at the box office. |
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| So Long Netflix… Picture this… Disney puts a blockbuster like Avengers Endgame on its platform the same day it opens in theaters. After a few weeks it’s no longer in theaters. You can’t buy it. You can’t rent it. The only way to watch is to subscribe to Disney’s steaming service, Disney+. For example, the only place your children or grandchildren will be able to see Toy Story 4 and Frozen 2 may be on Disney+. Can you imagine how many parents will sign up for this? I’ll certainly be subscribing for my daughter. At $6.99/month, what family with kids under 12 years wouldn’t subscribe? Plus, Disney owns 60% of America’s second-largest and fastest-growing streaming service, Hulu. |
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| Meanwhile, Netflix will lose a lot of its best content—and potentially millions of subscribers who switch to Disney+. While Netflix is running into debt “trying out” new shows, Disney already has the best of the best in its arsenal. |
And yes, it's more overheard for movies but when Black Panther brings in $1.35B from one movie alone, even higher production costs don't sway the needle to Netflix.
Disney has so much diversification it's hard to compare apples to apples, but Disney EPS is more than double that of Netflix. Maybe some of DIS other business are higher margin, but either way Disney is not getting Blockbustered by Netflix.
Yeh I don't get his point on this. Disney absolutely destroys the box office. Netflix would do that if they could. Right now Netflix releases movies to the theater because they don't get considered for awards if they don't.
I think the next logical step is for Netflix is deliver what are considered Blockbusters of their own on the small screen, but they can't seem to get that right just yet. Bird Box was a success, but at the end of the day it wasn't a great film. If it was in theaters and it got as many viewers as it did, I think it would have been considered a Blockbuster.
The one thing Disney has though are the big blockbuster videos that will always be great to see in Theaters. The Avengers and comic book films, are movies that are made to be seen in big theaters and I think that's why they are more popular at the moment.
Netflix already has the subscribers, and now Disney has to catchup from that stand point.
In the last twenty years since the resurgence of TV the biggest thing I've noticed is the complete lack of the mid-market movie. There is an opportunity there, but the only reason they existed was because the movie studios used their big money movie projects to fund these movies. Occasionally, they would have a hit, but over time they'd be lucky if the sum of these movies ended up profit neutral. I'm not sure where Netflix can capitalize on this as no one has ever been to monetarily capitalize on these types of movies.
I was just about to say this. Netflix is likely going to lose some of their family demo. They tried to get into it, but I see a pivot to them making more content strictly for the 20-45 year old demo with no children that is growing proportionately to those that have children.
However, they've built up their business without competition from Disney, Warner Media, etc. Those other companies aren't going to make the mistake they made when TV came in and they turned up their noses at the idea of having their own TV networks, which allowed the networks to make the money and become behemoths. The studios are going to have their own streaming services. And that's going to threaten Netflix's business model. Can they thrive against serious competition?
That's only slightly different from the OP's post, but the sheer volume of content on Netflix is kind of staggering. And a lot of it is great, and unique. Some of the stuff coming out of Europe is fantastic, and you can't get it anywhere else in America. But is this sustainable if there are other alternatives?
However, they've built up their business without competition from Disney, Warner Media, etc. Those other companies aren't going to make the mistake they made when TV came in and they turned up their noses at the idea of having their own TV networks, which allowed the networks to make the money and become behemoths. The studios are going to have their own streaming services. And that's going to threaten Netflix's business model. Can they thrive against serious competition?
That's only slightly different from the OP's post, but the sheer volume of content on Netflix is kind of staggering. And a lot of it is great, and unique. Some of the stuff coming out of Europe is fantastic, and you can't get it anywhere else in America. But is this sustainable if there are other alternatives?
Netflix is producing content because they absolutely have to too compete. Disney for instance has content from ABC from the absolute beginning of the station. Netflix knew that one day the networks would try to compete in the space, so Netflix just started to create as much original content as possible.
There is really good Youtube video that I'm trying to find that explains it really well, but I'm having trouble finding it.
There's some content on Netflix, but let's not call it staggering. For a company that is completely reliant on content, they don't have that massive of a movie lineup, especially with new movies or acclaimed popular movies.
Their bread and butter is TV series. Both from outside and internal content. Try to find a movie to watch with your family that somebody hasn't seen, doesn't have 1 or 2 stars, doesn't star Adam Sandler, or isn't something from years ago. It really isn't easy to do.
If you are looking for one repository to go to, it just isn't available - and that's OK.
If you are looking just to kill a few hours with a movie instead of a series episode, your choices on Netflix aren't massive. They actually are pretty sparse.
Anecdotally, I generally have zero interest in the movies that Disney provides and wouldn't opt for it over Netflix.
Also, Hulu's content can only be described as "limited" right now in comparison to Netflix. Hulu has what? 2 dozen channels worth of show content? Each of those channels probably averages about 7 or 8 shows.....it's not even close to the content (as far as T.V. shows) that Netflix has.
Netflix is up to $13 a month. They can brag about their original content all they want, but "Stranger Things" is not "The Avengers". They are getting an awful lot of eyeballs on account of their Disney and Marvel stuff which is going away. Can they continue to justify charging $13 a month ? If a family has to choose between Disney or Netflix, where will they go ?
We aren’t talking about large sums of money here. This is a wide open market that’s very cost effective, even to households with lower incomes.
More stuff like the Black Mirror movie I am sure is in production and that will be a huge differentiator.
And when Disney+ comes out I'll get that too.
Netflix also has a lot of successful original programming. Whether any of us feel they are "turds" is really less relevant than the fact that they are successful with their programming; People are watching.
And when Disney+ comes out I'll get that too.
Do you go outside?
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In comment 14452118 Mr. Bungle said:
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because you're paying $45/month for it AND they hit you with 90-second commercial breaks during an episode of a show. Bullshit.
You mean like - gasp - cable?
Ummm...no.
No? Cable doesn't do exactly that? They don't charge you for access and then still air commercials during the broadcast?
The vast majority of disappointment seems to be a problem of expectations rather than about the product itself.