Disney+ Shines, Netflix Slows as Streaming Competition Rages On
The race for streaming television is heating up, with Disney revealing on Wednesday that it is closing the gap on market leader Netflix, whose pace has slowed.
The US entertainment behemoth outperformed analysts' expectations in terms of new subscribers to its flagship streaming service, Disney+, whose big studio muscle helped it reach 129.8 million subscribers worldwide, five million more than expected
Netflix had 221.8 million subscribers at the end of the year, a massive number, but it announced slowing growth.
"We certainly recognize that the pie is large enough for both companies to succeed," CFRA analyst Tuna Amobi said of the streaming rivals.
"What is undeniable is that competition has increased."
Netflix and Disney+ both saw an increase in subscribers as a result of the pandemic's lockdown lifestyle.
Disney, the Hollywood entertainment behemoth celebrating its 100th anniversary next year, saw streaming subscriptions increase as pandemic restrictions eased, whereas Netflix saw them slow.
"Our unrivaled collection of assets and platforms, creative capabilities, and unique place in the culture give me great confidence that we will continue to define entertainment for the next 100 years," said Walt Disney Company CEO Bob Chapek in an earnings statement.
The company, which owns everything from movies to theme parks and also owns the streaming services Hulu and ESPN+, reported a profit that exceeded expectations on revenue that increased to $21.8 billion in the final three months of 2021.
Disney has a massive content pipeline and well-known franchises like Marvel and Star Wars, whereas Netflix has found success by investing in original content from Hollywood and beyond.
"These results speak volumes for Disney's storied brands and their ability to rise above the competition in an increasingly crowded digital media market," Insider Intelligence analyst Paul Verna wrote.
Disney, like Amazon's Prime video streaming service, is copying Netflix's strategy of investing in local content that appeals to the language, culture, and tastes of respective international markets.
"We have created a new organization within the company to shepherd the development of that content," Disney's Chapek said, adding that the company hopes to get "some global hits" from locally produced content.
Netflix has proven that approach works by supporting original blockbusters such as "Squid Game" from South Korea and Lupin from France.
Disney stated that it has 340 programs in the works outside of the United States that will be released in the next 18 to 24 months.
Netflix is relying on international markets for growth now that it is firmly entrenched in US households, and shows or films made in various countries by local talent have been a strength.
Disney, based in Southern California, is only present in about 60 countries, compared to Netflix's more than 190, but plans to add 100 more by 2023.
According to Amobi, Disney+ subscriptions could close the gap with Netflix once it enters all of those countries.
Netflix, Disney, and Amazon compete in India alone, a market that was estimated to have 60 million to 70 million paying subscribers last year.
However, the international expansion comes with the caveat that subscription prices are typically much lower than those charged in the United States.
To remain competitive, Netflix did not hesitate to lower its prices in India at the end of last year.
In India, where revenue per subscriber is lower than in other countries where its streaming service is established, Disney relies on subsidiary Hotstar.
HBO and its HBO Max service, with just fewer than 74 million total subscribers, more than half of whom are in the United States, lack the firepower of Amazon, Disney, and Netflix.
A planned partnership with Discovery+, which is expected to be finalized by mid-year, could give HBO a boost.
For the time being, NBC-owned Peacock, Paramount+, and even Apple TV are distant second-place finishers to the top contenders.
"Trends continue to favor streaming platforms," Amobi, an analyst, told AFP.
"Those tailwinds were accelerated by the pandemic. The question is, how many of those winds will be able to reverse after the pandemic?"
According to Digital TV Research, online video services will have 1.7 billion subscribers worldwide by 2026.
"There is more competition than there has ever been," Netflix CEO Reed Hastings recently stated.
Overall, he believes that traditional television will fade away over the next 10 to 20 years, with streaming becoming the new norm.