Disney+ is no substitute for Netflix say 65% of Americans responding to a survey
Late last month, we told you that two weeks after it launched video streamer Disney+ was a real threat to Netflix. After all, over 10 million subscribers had signed up for the service in the first 24 hours (although how many of those were paying subscribers remains unknown). About a month after its debut, Disney+ had been installed on 22 million mobile devices. Netflix, the world's top video streamer, has about 60 million U.S. subscribers and 97 million paying members worldwide.
When we wrote that Disney+ could challenge Netflix, our readers quickly pointed out that even though the streamer is off to a fast start, the latter's inventory of content is not broad enough to challenge Netflix. But Disney+ is more than just cartoons for kids. It includes the entire Star Wars series (outside of The Rise of Skywalker which premieres in theaters on December 20th), and action-packed films starring characters from the Marvel Universe. And those who grew up on Disney Channel fare will be able to watch shows like Hannah Montana, That's So Raven, Duck Tales and more. While we agree that Netflix appeals to a wider range of consumers, Disney has something for everybody too.
6.5% of the survey respondents with both Netflix and Disney+ said that they would cancel their subscription with the former
And that brings us to some interesting research conducted by Bank of America, the parent company of securities powerhouse Merrill Lynch. According to CNBC, 1,000 Americans took part in a survey and 6.5% of respondents with subscriptions to both Netflix and Disney+ said that they plan on dropping Netflix. At that level, Bank of America says that the streamer would lose enough subscribers to negatively impact revenue and throw a worry into Wall Street. However, the analysts who conducted the survey, Nat Schindler and Justin Post, aren't sure that Netflix will lose that many customers. In their research report the pair said, "We are skeptical that much of this churn is incremental or will be realized, with Bloomberg reporting Netflix had seen no increase in cancellations on 11/22, 10 days after the Disney+ launch."
Disney+ has holiday content for everyone
65% of the survey's respondents said that Disney+ was not a substitute for Netflix while 33% said that it was. The analysts wrote, "Our survey and company reports suggest healthy U.S. adoption of Disney+, but we are encouraged that most early Disney+ users do not see it as a substitute for Netflix. While it is possible that there is some incremental churn from Disney+, it looks to be modest and we do not see any broad trend changes in our survey data compared to October."
So in other words, both services can co-exist. Still, Netflix is under pressure here. Disney uncharacteristically has undercut Netflix on pricing. Disney+ offers a seven-day free trial with a $6.99 monthly charge (or 12 months for $69.99) afterward. That price includes an account that can register up to 10 devices with any four being used at the same time. And this price includes 4K streaming. Similar features for Netflix would require a subscription costing about $15 a month. And in April, NBCUniversal's Peacock will launch with as many as three tiers of service. This could include a free ad-supported level, a $5/month subscription with limited ads and a $10/month tier with no ads. The next month, HBO Max will debut and is expected to cost $15/month.
Competition is so tough among video streamers that HBO Max spent a reported $425 million so that it can exclusively stream Friends for five years while Peacock shelled out $500 million for the rights to stream The Office over a five-year period starting in 2021. It isn't clear whether all of these video streaming services will be able to survive independently in the long term. Yet, all of the streamers have enough backing financially to see who blinks first and at this point, we wouldn't want to bet against any of them.
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