This week, Netflix announced its latest quarters financial results, which revealed that they have added 9.6 million subscribers, which was 600,000 more than analysts were expecting, however new subscribers are starting to slow down as Netflix is forecasting that it would add just 5 million in the current quarter.

Netflix’s stock took a dive last week following Disney’s Investors Day presentation, following details on Disney+ being revealed.

Following the results being announced, Netflix CEO Reed Hastings released a letter to shareholders about the new competition from Disney+.

Recently, Apple and Disney each unveiled their direct-to-consumer subscription video services. Both companies are world class consumer brands and we’re excited to compete; the clear beneficiaries will be content creators and consumers who will reap the rewards of many companies vying to provide a great video experience for audiences.

 

We don’t anticipate that these new entrants will materially affect our growth because the transition from linear to on demand entertainment is so massive ​and because of the differing nature of our content offerings​. We believe we’ll all continue to grow as we each invest more in content and improve our service and as consumers continue to migrate away from linear viewing (similar to how US cable networks collectively grew for years as viewing shifted from broadcast networks during the 1980s and 1990s).

 

We believe there is vast demand for watching great TV and movies and Netflix only satisfies a small portion of that deman​d​. Last quarter, we talked about how our streaming hours in the US (our most mature market) on TV still only represents roughly 10% of total TV usage. We are much smaller and have even more room to grow in other countries and on other devices like mobile. For instance, Sandvine estimates our share of global downstream mobile internet traffic is about 2%.

With Disney, Apple, WarnerMedia and Comcast all set to release their own Direct-To-Consumer services within the next year, Netflix is under stiff competition and investors are becoming worried that Netflix’s business model isn’t working.

Netflix starting spending large sums of money on their own original content as they began to see a shift in how their content providers like Disney handled their content.  They’ve been borrowing billions of dollars to create a vast library to compete with the likes of Disney and Warner Brothers.

During an Investors Call, Reed said:

“There’s a ton of competition out there, and Disney and Apple add a little bit more. But, frankly, I doubt it will be material.”

While Netflix is still the biggest streaming service available, the additional competition will cut into their subscribers, however they also argue that with more streaming services being available, more people will cut the cord from cable, subscribing to multiple streaming services.

Will you be keeping your Netflix subscription when Disney+ launches?

For the latest Disney+ news, follow us on TwitterFacebook, and Instagram.



Roger Palmer

Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom. Email: Roger@WhatsOnDisneyPlus.com Twitter: Twitter.com/RogPalmerUK Facebook: Facebook.com/rogpalmeruk

Related Article