Just released yesterday by Disney that they would be bundling their new streaming services they've acquired over the past couple of years for $12.99 (https://techcrunch.com/2019/08/06/disney-hulu-esp…) ... As of right now Netflix alone cost from $9-16. Want to gather thoughts on this new offering and how much further this may disrupt the media industry?
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Appealing although savings aren't that much for most people in this blog. I will say the Hulu TV and Hulu combo are a great 1-2 punch. Espn+ is also A+. I would still use Netflix despite this though.
Yeah at $10-$15/month people will likely just use both. Think this would be worse for any of the ancillary streaming services.
NFLX killer? No. I already have Hulu as well as NFLX so I am going to go ahead and purchase this in lieu of Hul. They almost have to bundle it because Disney+ as it currently stands doesn't have enough new content to warrant a purchase from me and as far as ik ESPN+ is NOT the same thing as having ESPN. As far as I know the big games that ppl watch ESPN for (ex. college football playoffs, NBA games) are not on ESPN+.
Title was for dramatic effect, draws people to the post. Hence over-labeling as "Netflix Killer". You are correct about the big games not being on ESPN+, but I would imagine the long term goal is leading towards this platform. The real question that lies with Netflix is whether or not their massive investment in original content is something they can lever as they raise prices over time.
You long the stock? Using the ticker as casually as you did makes me wonder.
Overpriced at current levels, imo. I believe in the company long-term, just not at this valuation.
If this isn't the ad-free version of Hulu then it isn't going to take off
The ads on hulu are brutal. Hulu isn't even worth logging in to if you don't have premium
Why? A decent cable TV package costs $100, so you can get Netflix, Disney Mix, and HBO and it'll still be only half as expensive as the cable.
I'm in the boat of DIS+ killing netflix. Mainly my thesis is its a one way street between what DIS can leverage vs what NFLX can leverage due to IP.
For example, the original content made by NFLX can be easily replicated by DIS, but its much for difficult for NFLX to copy something from DIS. Take Stranger Things, DIS could probably make a better version of this than NFLX can make a Star Wars copycat. Thats how it stands now though, I'm sure NFLX will find some pivots to battle what DIS is bringing to the table.
This is a simplistic take. People would've said you can't more popular fantasy property than LOTR given its history and its pre-existing IP/fan base. Then GoT happened. Great studios can make original content and beat out those that are recycling IP, and vice versa.
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Agreed on great studios making great content. However, great studios and talent is not an infinite resource, theres only so many good ideas that can go around (that's why Disney keeps remaking every thing).
With the GoT/HBO comparison, they have proven that they can make original content. NFLX can make it, but is there really one overarching show they make that everyone wants to see?
Netflix's top shows are not originals but "The Office" and "Friends," which will be pulled by NBC Universal and Warner Media, respectively. They are spending $13B+/year on content, but the originals are not enough to increase its subscriber base. Disney is in a unique position of having a powerful brand, a wealth of unique original content and IP, and the right pricing for its streaming service. Even if Netflix customers don't cancel to switch over to Disney+, the issue is whether Netflix's valuation can be justified if investors think its subscriber growth will decline. Thus far, it has been valued as an "Amazon," insofar as investors willing to overlook negative cash flow and negative profits in exchange for subscriber and revenue growth.
I think people are seriously mistaken as far as the impact of The Office and Friends for NFLX. Yes, they are their "top" shows but that's because millions of people watch the office re-runs in the background while doing other things. People do not pay for NFLX for The Office or Friends... I would imagine shows like Stranger Things have been bigger draws for new subscribers than The Office has. That's my biggest issue with the "so many ppl watch the office" stat - what is the engagement? Stranger Things has become an anticipated event. The Office is a legendary show but I imagine the viewership numbers are blown way out of proportion by passive viewing - which people will not pay a subscription fee to do.
I agree that the originals are primarily driving acquisition, but retention is a different story. Once you finish watching the season of an originals, you need other content to keep you in. So let's say you initially sign up for NFLX due to "Stranger Things," and then you realize that they also have re-runs of the Office and Friends and decide that it's worth keeping so you can watch the re-runs whenever you want. I used to work for a Netflix rival, and we kept a close eye on the TV shows that customers routinely watch over a period of time. I'm sure that Netflix also has similar internal data, and I'm pretty sure that they're pissed about losing the Office and Friends.
I mean...maybe if I had kids?
I'm going to watch Netflix, HBO, and movies on Amazon Prime far more than I'd watch Hulu or Disney Plus.
Also, I hate to be that guy, but what's another $12.99 a month? That's three fewer coffees or one (or 0.5) fewer lunches.
I think cash will ultimately be king here. This market used to just be Netflix. They got a lot of financing and then tried to juice up subscribers and loyalty by buying up content. Well, now Disney is entering the fray, HBO, Apple, etc. Whoever can slush around cash most effectively while eating subscriber acquisition will ultimately win and the market will consolidate.
The way I was considering this situation when writing the post was from a purely corporate strategy perspective. As of right now, I don't think Netflix has a significant piece of original content that want so badly that they are willing to get over the loss of your Office+Disney+Marvel+Friends content. I see Hulu as the king of TV shows (granted the ads are absolutely MISERABLE). The major inputs for this content subscription models are 1) pricing and 2) subscriber growth. To me Hulu has much more room to grow subscribers, will now have pricing power to raise prices because, whether or not the people on this forum agree, the content Disney owns is way more valuable than anything Netflix can create in the next 5 years.
While the $12.99 price point of Hulu/Disney+/ESPN+ is a better value, what happens if Netflix spends more creating Netflix only series on their platform that is only available there. People have no other choice to pick Netflix to watch their original series. Also, if there is a lot more subscribers, I think Netflix can continue to compete and either lower their prices.
Yes, but the amount of capital that is necessary to create such popular content is completely absurd from a valuation perspective. What you are suggesting is that they align towards HBO's model which they can't even benefit from cable revenues like HBO can. Netflix is already in hot water because their subscriber numbers in the US have not been growing and they are throw mud at the wall with original content and most doesn't stick. They only reap the rewards of good content if subscriber base grows or prices go up
article on US subscriber base: https://www.nytimes.com/2019/07/17/business/media/netflix-earnings-subs…
I stand corrected, thank you for the article. I also wonder if it is also because people share Netflix accounts also taken into account.
So Netflix spends on more content and crushes everyone else. Its that easy right? If only Disney, Apple, Google, and Amazon had money, they'd be able to prevent this. Such a tragedy for them.
With both for a combined ~$22 I do not see it being a killer. I pay $9 for Netflix. I am not going to cancel because I sign up for this Disney service (if I do). Maybe if both were in the $20 range but for that amount I could care less. I love the ESPN 30 for 30's and seems they are increasingly being pushed to this style of platform.
Just curious - what subscriptions are you all signed up for currently? By my count I am in: - Netflix: $9/month -HBO Go: $15/month (love my Entourage) -Hulu combined with Spotify: $10/month (the ads can get a little annoying but having access to unlimited music and Seinfeld is a game changer) -WSJ: Trial subscription currently but as of now will move to $20/month which is worth is. Considering doing Bloomberg too if company won't cover it.
Interesting takes from folks here. I'm of the belief that it's not necessarily a zero-sum game, I see no problem with the streaming services being able to co-exist. I think the bundle package by DIS is incredibly smart, especially as it launches its DIS+ offering. The value proposition is clearly there and you'll be able to reach a critical mass of paid subscribers (though the current pricing structure is likely not sustainable).
I think that it disrupts the cable industry for the most part. When you look at the massive content library owned by Disney (Fox, Disney, and Comcast content - at least for now... who knows what they will do in response), this will further cause structural changes to the Television business and may hurt certain competitors like NFL RedZone. I think certain things such as In-Market sports (so watching the Giants or Jets if you live in the NYC metro area), television agreements in place with sports leagues (ex. College Football), so it will spur on additional cord cutting and reduce cable subscriptions. Given the cost of a cable bill, having Netflix, the Hulu/ESPN+/Disney+ package, and Amazon Prime will be seen as a justifiable savings.
As to whether or not it disrupts Netflix, I think that's a harder question to answer. I think that won't take users away and will be seen as a complementary services. Just think about how many people have both Netflix and either Amazon Prime or Hulu already. Having two services won't break the bank. Additionally, having a competitor like Disney would force Netflix to further invest in its original content. I think Disney has a competative edge here, but not enough to disrupt Netflix entirely. Should be interesting to see though.
Can Netflix survive as a complementary service? I"m not sure they can long term - especially if they continue to bleed huge numbers and have no ancillary sources of revenue from their originally produced content outside of subscription fees - which if they keep doing massive deals with the Rock and others.... can they really keep raising the price?
I look at someone like Amazon, which I could argue has similar challenges with a huge exception - they have a ton of other revenue sources and are playing a whole different game by bringing more people into their ecosystem, etc. Even Disney has a similar situation where they are going to create content regardless, and now are simply trying to get into the distribution of it to generate revenues.
It seems to me we are going right back to bundled packages again, just with more logins - give me one place where i can login, access all of them and i'd probably end up happier.
I'm not sure they can as a complementary service. I think the underlying issue is how quickly they can generate enough high-quality Netflix Exclusive content that drives users to retain their subscriptions. I think part of what may be an offsetting factor is the cost structure that Netflix is paying to acquire content. They are paying Cost + 30%, retain the future licensing rights and content producers are happy because Netflix does not get in the way of production. From what I've read, content producers tend to like that Netflix is hands-off when it comes to vision and enjoy working with a nearly full budget. I firmly believe that people go to where good content is. Just look at HBO after Game of Thrones. Their subscription base for HBO Go/HBO Now dropped significantly after GoT went off the air. If Netflix is able to regularly produce quality content that can attract and retain viewers, then it becomes a viable complimentary service.
I think it's funny you mention Amazon as an exception. I think my concern for Prime Video is what happens if Amazon is charged with Antitrust violations. To be clear here, when I say Antitrust, I'm talking about it at the level of Grandma Bell where Amazon will be broken up into separate companies. Although they have tons of other ways to help secure revenue, if Prime Video is spun out or affected by any core issues affecting Amazon, it will suffer the same issues at Netflix does. Disney is an entirely different beast though. Disney has a full TV/Film production arm, multiple revenue streams across merchandising, theme parks, and travel, and doesn't come with the Antitrust issues that Amazon has.
However, I do think you're right that we are going back to bundled packages, just through streaming services and with more logins.
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