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The Zacks Analyst Blog Highlights: Netflix, Disney, Apple and Amazon

Zacks Equity Research

For Immediate Release

Chicago, IL –December 13, 2019 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Netflix NFLX, Disney DIS, Apple AAPL and Amazon AMZN.

Here are highlights from Wednesday’s Analyst Blog:

Netflix’s Streaming Dominance in Jeopardy: Handicapping the Field

The battle for streaming market dominance is intensifying between Netflix and new entrants Disney and Apple.

While Netflix dominated this year’s Golden Globe in terms of nominations (34 overall), Apple’s The Morning Show, which debuted on its streaming platform Apple TV+, won three nominations. For a one-and-half-month-old platform (Apple TV+ launched on Nov 1), it is a major confidence booster.

Meanwhile, Disney’s streaming platform Disney+ has already been downloaded 22 million times since its launch on Nov 12, per Reuters, which quoted a report from Apptopia.

The company now serves almost 41.5 million viewers in the United States, including subscribers of Hulu and ESPN+, compared with Netflix’s 61 million.

Intensifying Competition to Hurt Netflix’s Prospects

Apptopia also stated that the performance of Netflix and Amazon’s prime video was not affected by the impressive download figures of Disney+. Nevertheless, Netflix is expected to lose market share due to a number of reasons in the long haul.

Notably, Apple’s content strength and focus on original content boost its growth prospects in the streaming space. Additionally, Disney’s expansive library of movies, including the hugely popular Marvel Cinematic Universe (MCU), and shows is a key catalyst.

More importantly, both Apple and Disney are deep-pocketed companies and the streaming services currently form a very insignificant part of their business models compared with Netflix.

On the flip side, Netflix plans to counter rising competition on the back of a robust content portfolio and binge viewing. The streaming giant is estimated to spend $15 billion this year on content compared with $12 billion in 2018.

However, increasing spending is expected to negatively impact free cash flows. Netflix expects to spend $3.5 billion in cash on operations and investments in 2019. Notably, the streaming giant has a content obligation of almost $19 billion in its balance sheet.

Notably, Netflix’s shares have returned 11.6% year to date, underperforming the S&P 500’s rally of 24.3%.

Netflix the Priciest Among the Streaming Players

Further, Apple and Disney’s competitive pricing is hurting Netflix.

At $4.99 per month, Apple TV+ has undercut the pricing of every other streaming service provider. Moreover, while Disney+ charges $6.99 per month, the company is also offering a bundle package of Disney+, ESPN+ and ad-supported Hulu for $12.99 a month.

Moreover, HBO max, set to be introduced in May 2020 at $14.99 a month, charges $1 less than Netflix’s costliest plan.

Meanwhile, Amazon prime video subscription costs $8.99 a month, while Prime members, paying $12.99 per month for shipping and shopping deals, can avail video services as well.

Content Loss to Hurt Subscriber Base

Although Netflix is still the largest streaming player globally, lack of content from Disney’s Marvel-Pixar hits is expected to hurt its ability to add subscribers.

Moreover, the competition to gain exclusive rights to classic TV shows has intensified among streaming service providers and might hurt Netflix.

Hulu grabbed the rights to ER. Disney, Amazon prime video and HBO Max secured rights to The Simpsons, Sex and the City, Friends and The Big Bang Theory, respectively. In the meantime, Peacock acquired exclusive rights to The Office.

Disney+ & Apple TV+ Expected to Grow Rapidly

Per Digital TV Research report, Disney+, Netflix Amazon, Apple TV+ and HBO Max will have 529 million subscribers by 2025. These services are expected to add 257 million subscribers between 2019 and 2025.

Disney+ is anticipated to reach a total of 101 million subscribers, most among these service providers, trailed by Netflix, during this time frame. Disney+ is expected to have 60-90 million subscribers globally by the end of fiscal 2024.

According to a CNBC report, Apple TV+ is expected to become a $9-billion-per-year business with 136 million paid subscribers by 2025, assuming that one in every 10 Apple users will pay for the service, as estimated by Morgan Stanley analyst Katy Huberty.

However, according to Needham analyst Laura Martin, quoted by MarketWatch, Netflix is expected to lose 4 million U.S. subscribers in 2020 due to increasing competition.

Zacks Rank

Netflix, Apple and Disney currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

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