The streaming wars are coming to a boil with the release of Disney+ DIS inciting fear and excitement in the markets. DIS has rallied 9% since the beginning of the week, reaching all-time highs, with robust Disney Plus traction being the catalyst. Netflix NFLX has tumbled over 3% since Monday as investors fear this new market entry could impact its subscription growth.
Cord-cutting is accelerating, with more than 50 million Americans expected to cancel cable in the next 3 years. Disney and Netflix are now fighting head to head, and the stakes are growing with every cord-cutter. Recent market activity may be providing us clues about who will prevail as the market leader. Below you can see DIS’s and NFLX’s performance over the past 6 months.
Disney Plus became available to the public on Tuesday, November 12th, and streaming junkies around the US rushed to sign up for the new platform. In the first 24 hours of its release, 10 million people had already signed up for this much-anticipated streaming service. This represents roughly half of the total TV subscribers of long-time cable leader Comcast CMCSA.
The massive amount of interest can be partially attributed to the 50 million Verizon VZ unlimited plan customers who are eligible for a free year of Disney+. I myself am an unlimited plan customer and signed up for Disney+ through this channel yesterday.
I was impressed with the vast library that Disney+ held right off the bat, from every Marvel hit to all of the TV Disney movies we loved as kids. The platform appears to be a must-have for any household portfolio of streaming services.
Disney+ is currently only available in the US but will become international next week when it is released in Australia, New Zealand, and Puerto Rico. In the spring of next year, the platform will be released across Europe.
Disney is anticipating this service will have between 60 million and 90 million global subscribers by 2024. This is compared to Netflix’s158 million worldwide subscriptions. I think that Disney could be erring on the conservative side with these estimates, especially considering the enormous response this service received in just 24 hours.
What’s Next For the Space?
With cableless households becoming a norm, media companies are scrambling to enter the streaming space. Media conglomerates like AT&T T and Comcast are preparing to launch their own subscription services in the spring of next year, further saturating the category.
Roku ROKU, the streaming device king, is well-positioned to take on the additional subscription offerings. Roku currently controls 50% of the streaming device market and gains 1 out of every 2 cord-cutters as a customer. Roku’s product offering expands with every new service that enters the market.
ROKU has run up 380% since the beginning of the year and still has seemingly more room to go. Since the release of Disney+, these shares have rallied almost 14% as its portfolio of streaming necessities extended.
The streaming space is steaming and appearing to evaporate some of Netflix’s future growth potential. There is room for everyone to grow in the melting pot of streaming services, but some will expand their market leadership faster than others. Disney+ gained traction in the market right out of the gates, and after using the service myself, I understand why.
With more combatants entering the arena this upcoming spring, I expect Roku to further grow its user base with cord-cutting accelerating the pool of potential customers.
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Click to get this free report The Walt Disney Company (DIS) : Free Stock Analysis Report Netflix, Inc. (NFLX) : Free Stock Analysis Report AT&T Inc. (T) : Free Stock Analysis Report Verizon Communications Inc. (VZ) : Free Stock Analysis Report Comcast Corporation (CMCSA) : Free Stock Analysis Report Roku, Inc. (ROKU) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research