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Netflix Idea Proposal (NFLX, DIS, AMZN)

Netflix Idea Proposal (NFLX, DIS, AMZN)
 

Does Disney’s departure portend trouble for Netflix?

 

Report Available: October 12, 2017

 

Blueshift’s initial research found NFLX thriving with millions of new subscribers, but numerous competitive threats looming. DIS is starting its own streaming services and pulling some premium content from NFLX’s platform. The competition among streaming services like Hulu and HBO Now, as well as skinny bundles from pay-TV operators like DirecTV Now, continues to heat up, with AMZN making some gains on NFLX in Europe. FB is getting into the fray with a new free video platform, and AAPL has set a $1 billion budget for original content.

 

Observations

  1. NFLX continues to hum along with Q2 revenues climbing 32% to $2.8 billion as the subscription video service added an eye-popping 5.2 million new subscribers, including more than 1 million in the U.S. NFLX plans to spend $6 billion on original content this year to add to its stable of hit shows like House of Cards and Orange is the New Black, and as a hedge against the rising costs of licensing shows and movies from other content developers.
  2. In what could be a blow to NFLX, however, DIS announced that it will be starting two of its own streaming services, one centered on ESPN sports programming and another with content from its Disney and Pixar movie studios. In addition, DIS said it would stop licensing that Disney/Pixar content to NFLX by 2019. DIS is a content juggernaut – all five of the top grossing movies in 2016 were from DIS, which set a global record by breaking $7 billion in box office sales. Its movie franchises include Toy Story, Star Wars, and Marvel Comics, while its TV networks include ABC and the kid-focused Disney channels.  Some fear that its decision to pull content from NFLX will lead other major content producers to do the same.
  3. The competition among streaming video providers continues to get more intense with players like Hulu, T’s DirecTV Now, CBS’s All Access, GOOG/GOOGL’s YouTube, TWX’s HBO Now and numerous others all vying for eyeballs. AMZN will spend an estimated $4.5 billion on original content this year and is reportedly making significant gains on NFLX in top European markets.
  4. The proliferation of streaming services continues to take its toll on traditional pay-TV providers like DISH, CMCSA and CHTR. Pay-TV operators lost nearly a million subscribers last quarter alone as consumers – especially younger ones – shun expensive TV packages in favor of cheaper streaming options. However, the streaming video landscape remains a sometimes frustrating hodgepodge of different services, making it difficult to find specific shows or movies.
  5. To further complicate the landscape, FB is rolling out its Watch tab, a new page dedicated to free video content with partners like MLB, A&E, Time Inc. and others. The social media giant is also investing in at least two original shows. Meanwhile, AAPL is reported to be spending $1 billion to acquire original TV and movie content while hiring two longtime Sony Pictures Television executives.

 

What will DIS’s new streaming services mean for NFLX? Will other big content owners follow DIS’s lead and stop licensing shows and movies to NFLX?  What kind of traction will DIS’s new streaming services get? Will DIS withhold more content from NFLX? How big a threat is AMZN Video to NFLX in the U.S.? Will FB’s Watch have a meaningful impact on viewing habits? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Pay-TV operators, TV advertising executives, Streaming video technology developers, and Industry specialists.

 

Companies: Netflix Inc. (NFLX), Walt Disney Co. (DIS), Alphabet Inc. (GOOG/GOOGL), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), AT&T Inc. (T), CBS Corp. (CBS), Charter Communications Inc. (CHTR), Comcast Corp. (CMCSA), Facebook Inc. (FB), Time Warner Inc. (TWX)

 

Research Begins: September 25, 2017