In just a few weeks, video-streaming company Netflix (NFLX)will finally get some meaningful competition. That’s when entertainment king Disney (DIS) will launch its own streaming service. Called Disney+, this move is the Magic Kingdom’s most exciting in a very long time. It also sparks what observers have called the streaming wars.
With increasing digitalization technologies come winners and losers. And over the past several years, a clear loser has been traditional cable TV providers. Depending on what statistic you use, the average cable TV bill can run from $60 to over $100 monthly. But with Netflix offering its premium membership for less than $20 per month, cable TV has made decreasing sense.
Thus, the original streaming wars – if you can call it that – involved new tech against old. Undoubtedly, the dramatic rise in NFLX shares represented the disruption that “cord cutting” has caused.
Ironically, though, this change of fortunes inspired cable TV providers and associated businesses to shift their strategies. With Disney moving firmly into the streaming wars, the disrupted has become the disrupter.
Now, several analysts are describing Netflix in the same language they used to describe cable TV. Will the streaming wars finally take down NFLX, which has so far enjoyed a practically uncontested road?
Netflix Still Has a Chance to Rise above the Streaming Wars
On the surface, Disney+ presents a tough challenge for Netflix. First, the company is running an introductory price point that is considerably lower than Netflix’s offering. While I doubt this is sustainable indefinitely, it’s certainly a shot across the bow.
Second, as the streaming wars intensify — keep in mind that Apple will also launch its streaming service Apple TV+ — the increased choices may prove an obstacle for all players. With each service providing exclusive flagship content, consumers will have to buy multiple subscriptions.
That might not matter for two or three cheap subs. But as this number piles up, the comparative discount from cutting the cord declines.
Finally, Disney has a mind-blowing array of content and marquee franchises. No one else in the streaming wars comes close, which is problematic for Netflix. However, Netflix offers its own original content, many of which are gritty and go beyond the family-oriented limitations of the Disney brand.
Thus, I don’t really see NFLX being a loser here, although time will truly tell. Instead, I see redundant offerings, such as Amazon Prime Video or YouTube TV, taking a hit. And with over-the-top streaming equipment providers like Roku, corded television remains a huge question mark.