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Netflix Has Repelled Disney+, but This Study May Alarm Investors


Nov. 25 2019, Published 12:18 p.m. ET

Walt Disney’s (DIS) Disney+ video service arrived with a bang, attracting over 10 million subscribers on its first day. Disney+ and Apple TV+, which launched this month, hope to take customers from Netflix (NFLX), the market leader. Both services are priced competitively. However, Netflix has held its own in the escalating streaming war. Netflix’s internal data and third-party analysis show the company has repelled the competition from Disney+ so far.

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Netflix data show no signs of subscriber losses to Disney+

Although Disney+ made a strong debut, Netflix has yet to see many customers defect to the rival service. Citing Netflix’s internal data, Bloomberg reports Netflix’s subscriber churn (which measures their rate of defection) has not increased since Disney+ launched.

App download data also shows Disney+ has had a negligible impact on Netflix. Many people have continued to download the Netflix app, even with the lower Disney+ price.

Study casts doubt on Netflix’s content strategy

Although Netflix has stood its ground against Disney+, a new study has cast doubts on the strength of its content strategy. Netflix has invested heavily in its content. In fact, Netflix has been increasing prices for its customers so that it can continue those investments. The company’s leadership believes great content will enable Netflix to continue thriving amid the streaming war.

In a letter to shareholders last month, Netflix downplayed the threat of competition, touting the strength of its content. It wrote, “While the new competitors have some great titles (especially catalog titles), none have the variety, diversity and quality of new original programming that we are producing around the world. The launch of these new services will be noisy.” It added, “In the long-term, though, we expect we’ll continue to grow nicely given the strength of our service and the large market opportunity.”

While Netflix counts on the strength of its content to withstand Disney+, some customers feel its content is dull. A new KilltheCableBill study shows 42% of Netflix subscribers who ditched the service did so for its lack of interesting content, which looks strange given Netflix’s heavy content spending. Netflix’s content costs were $8.9 billion in 2018. They’re set to rise to $15 billion this year and keep rising.


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