Topline: New data shows Disney+ gaining subscribers and market share in the intensifying streaming wars—and that looks increasingly grim for Netflix, top Wall Street analysts say.
- Disney+ is steadily gaining ground, offering its service for cheaper and featuring content like Star Wars’ “The Mandalorian,” which, thanks to pop culture phenomenon Baby Yoda, has quickly become the most in-demand TV show in both the U.S. and the world.
- The company reported 10 million sign-ups after its first day, and Google’s recently released annual search trends report shows that Disney+ was the highest trending search in the U.S. for 2019.
- With Disney+ reaching the top spot in both Apple and Google’s app stores, app-tracking company Apptopia found that the service has been downloaded 22 million times on mobile devices since it launched four weeks ago, averaging almost 10 million daily active users, CNBC reported.
- Shares of Netflix, meanwhile, have fallen almost 2% since Tuesday, when Needham’s Laura Martin, one of the most widely followed analysts in the space, downgraded the stock to a sell rating amid increased competition from rival services like Disney+ and Apple TV+.
- Martin predicts that if Netflix keeps monthly prices in the $9 to $16 range, the company could lose as many as 4 million U.S. subscribers next year. She proposes that Netflix offer a cheaper subscription option, featuring several minutes of advertisements each hour to match competitors’ pricing options of between $5 and $7, CNN reported.
- Other Wall Street analysts are similarly skeptical of Netflix’s near-term outlook, according to CNBC, as its stock trades at a high valuation and it increasingly spends more on original content in order to keep up with that of their rivals.
Crucial statistics: Disney stock is up over 6% since it launched the streaming service, while Netflix shares have only gained less than 2% during that same period in comparison. Apple stock is up just over 3% since then. So far this year, Netflix stock has majorly disappointed, worrying Wall Street investors. The stock is up just 11% in 2019—severely lagging behind Disney’s 35% return so far. Apple stock, meanwhile, is up 71% this year, hitting numerous new record highs amid booming product sales.
Crucial quote: “We downgrade NFLX because it has consistently stated it will not have advertising, which we believe will result in U.S. sub losses,” Martin wrote in her recent note.
Key background: The streaming wars will continue to ramp up as new services steadily enter the market. Netflix was a longtime leader in streaming but has been undercut by existing competition from Amazon Prime TV, Hulu, CBS All Access, Apple TV+ and Disney+, which all threaten to take market share. More emerging competitors, like AT&T’s HBO Max and Comcast’s Peacock, which will launch in 2020, continue to enter the market and pose new threats as well.