Forbes
Netflix Holds Steady Despite Competition from Disney, But Curbs Expectations For 2020
By: Ariel Shapiro
The great streaming wars are here, and so far Netflix is unscathed. However, tougher times may lie ahead.
The entertainment behemoth reported its first quarterly results since Disney and Apple debuted their streaming services in November. While some speculated that Disney in particular could take a bite out of Netflix’s customer base, that has yet to materialize. Between October and December, Netflix added nearly nine million global subscribers for a total of 167 million.
Only 500,000 of those additions were in the U.S. The streamer saw its biggest gains in Latin America and Asia, with 2 million and 1.7 million additions, respectively, thanks to its investment in local-language originals.
Netflix’s stock briefly fell in after-hours trading on weak subscriber guidance for the first quarter of 2020. The company forecasted only 7 million additional subscribers between January and March, down from 9.6 million additions in the same quarter last year. The stock eventually climbed and settled at 2.5% up.
Although Disney has not yet eaten into Netflix’s subscriber base, that could change. Disney+ got a staggering 10 million sign ups in its first 24 hours on the market, and it shows no signs of slowing down. According to market intelligence firm Sensor Tower, Disney+ has been downloaded 41 million times across the App Store and Google Play. Plus, it is cheaper than Netflix’s basic $8.99 monthly plan (for those who do not get it for free in a Verizon bundle) at only $6.99 per month.
On a video interview for investors, Netflix CEO Reed Hastings acknowledged that Disney+ has enviable content. “It takes away a little bit from us,” he said, “but most of the growth in the future is coming out of linear TV.”
According to a study by MoffettNathanson, Disney+ has started out as a complement to Netflix. But Disney+ is set to expand even further, launching in Western Europe on March 24, a full week earlier than originally planned. Plus, more high-profile services are poised to enter the market. WarnerMedia’s HBO Max debuts in May with former Netflix standby Friends and high-profile favorites like The Big Bang Theory and South Park, while NBCUniversal’s Peacock will launch nationwide in July with Law & Order and, starting in 2021, The Office, another big draw for Netflix.
Netflix has been through content loss before, according to Hastings. About a decade ago, Disney content was pulled from the platform. “We were all worried about the big impact,” he said. “Instead, people came back… and found other things to watch.”
Plus, Netflix’s latest slate was nothing to sniff at. Fantasy romp The Witcher brought in 76 million viewers, according to the streamer, while the buzzy second season of You is expected to bring in 54 million viewers in its first four weeks (it debuted just after Christmas). Plus, Netflix has a serious shot at Oscar glory with The Irishman and Marriage Story in contention for best picture.
It’s spending the big bucks to give its prestige films an edge with Oscar voters. According to its letter its shareholders, Netflix spent 20% more on marketing between October and December than it did in the same quarter of 2018.
