Shares of Netflix were slightly up in early trading, then dipped, but movement was basically “a non-event” said Raymond James analyst Justin Patterson. He said if anyone would have told him months ago that Disney+ would bank nearly 29 million subscribers through February 3, he’d have anticipated Netflix taking a major hit.
Netflix shares were trading off just 0.37% midday. Disney was down 3.8%
Walt Disney yesterday reported the Disney+ service launched on Nov. 12 had 28.6 signups as of Monday.
“While there can be noise in metrics in the short run, we prefer to take a page from Frozen and ‘Let It Go.’ The success of Disney+ is partially attributable to Netflix’ role as a pioneer, which helped drive video hardware and software innovation, encourage media bundling by broadband and wireless providers and shift consumer behavior away from linear,” Patterson said. “New disclosures from Hulu Live TV and YouTube TV reinforce that skinny bundles are an imperfect solution to linear TV challenges. Consumers want their Netflix … and now their Disney+. We continue to see Netflix and Disney co-existing.”
BofA analyst Nat Schindler said Disney+ engagement trails that of Netflix, “reinforcing our view that Disney+ is not a substitute.” Disney’s highest-profile streaming releases this year, including Marvel shows and the second season of The Mandalorian, are “clustered” in the fall and fourth quarter of 2020, “which limits Netflix’s competition from a content perspective,” he said in a note picked up by Bloomberg.
On a conference call Wednesday, Walt Disney chairman-CEO Bob Iger said Disney+ subscribers watched it an average of six to seven hours a week. Patterson called that a decently significant chunk of the 26 to 27 hours a week people stream in total – as per Roku data from last fall that he finds a good indicator. He believes the Disney+ viewing may have ebbed and flowed since launch, the flow coming when subscribers watched The Mandalorian then stuck around to watch something else.
Netflix CEO Reed Hastings has said for years the streaming market is big enough and growing fast enough for multiple services. What else would he say? And Iger yesterday was clear about and committed to the company’s measured rollout of new shows. And what else would he say? But maybe Wall Street is starting to take them at their word.
“They are two very different services,” Patterson said.