The race for streaming TV is heating up, with Disney showing on Wednesday that it is closing the gap with market leader Netflix, whose progress has slowed.
The American entertainment giant has exceeded expectations for new subscribers to its flagship Disney+ streaming service, whose big studio muscle has helped it reach 129.8 million subscribers worldwide, or some five million more than analysts had expected.
Netflix ended the year with 221.8 million subscribers, a huge number, but it announced a slowdown in growth.
“We certainly understand that the pie is big enough for both companies to succeed,” CFRA analyst Tuna Amobi said of the streaming rivals.
“What is undeniable is that the competition has become more intense.”
Both Netflix and Disney+ have seen numbers explode under pandemic-induced lockdown lifestyles.
Disney, the Hollywood entertainment giant which turns 100 next year, has seen streaming subscriptions pick up as pandemic restrictions ease, while Netflix has seen them slow.
“Our unparalleled collection of assets and platforms, our creative capabilities, and our unique place in culture give me great confidence that we will continue to define entertainment for the next 100 years,” said Bob Chapek, CEO of the Walt Disney Company, in a press release.
The company, with an empire that spans movies to theme parks and also includes streamers Hulu and ESPN+, reported earnings that beat revenue forecasts which jumped to $21.8 billion in the past few months. last three months of 2021.
Disney has a huge content pipeline and big franchises like Marvel and Star Wars, while Netflix has managed to invest in original content from Hollywood and beyond.
“These results speak volumes about Disney’s legendary brands and its ability to stand out from the competition in an increasingly crowded digital media marketplace,” wrote Insider Intelligence analyst Paul Verna.
Like Amazon’s Prime video streaming service, Disney is copying Netflix’s tactic of investing in local content that appeals to the language, culture and tastes of respective international markets.
“We’ve created a new organization in the company to guide the development of this content” and hope to achieve “global successes” from locally produced content, Disney’s Chapek said.
Netflix has made this approach work, backing original blockbusters like South Korea’s “Squid Game” and France’s Lupin.
Disney said it has some 340 programs underway outside of the United States that are expected to ship in the next 18 to 24 months.
Shows or movies made in various countries by local talent have been a strength for Netflix, which is relying on international markets for its growth now that it’s firmly entrenched in American homes.
Southern California-based Disney only has a presence in about 60 countries, compared to Netflix’s more than 190, but aims to add 100 more by 2023.
Disney+ subscriptions could still bridge the gap with Netflix once it enters all those countries, according to Amobi.
In India alone, Netflix, Disney and Amazon are rivals in a market that last year had between 60 and 70 million paid subscribers.
With international growth, however, comes the caveat that subscription prices tend to be much lower than what is charged in the United States.
Netflix did not hesitate to lower its prices in India at the end of last year, to remain competitive.
Disney relies on its Hotstar subsidiary in India, where revenue per subscriber is lower than in other countries where its streaming service operates.
With just under 74 million total subscribers, more than half of them in the United States, HBO and its HBO Max service lack the firepower of Amazon, Disney and Netflix.
A planned marriage to Discovery+, which should be finalized by the middle of the year, could give HBO a boost.
NBC-owned Peacock, as well as Paramount+ and even Apple TV are, at the moment, far behind the top contenders.
“Trends always favor streaming platforms,” analyst Amobi told AFP.
“The pandemic has accelerated those tailwinds. The question is, coming out of the pandemic, how many of those tailwinds might reverse?”
Digital TV Research estimates that online video services will have 1.7 billion subscribers worldwide by 2026.
“There’s more competition than there’s ever been,” Netflix chief executive Reed Hastings said recently.
Overall, he added, there is a belief that traditional television will wither away in the next 10 to 20 years as streaming becomes the new normal.