Netflix vs. Disney Plus: Service To Lose 10M Subscribers Next Year, Analyst Warns

The Empire called Netflix Inc. that lords over the streaming media universe will lose a lot of battles to the gaggle of rebels like Disney and Apple arrayed against it but is in no danger of being toppled from its number one perch in the short-term.

The Walt Disney Company is the most formidable of these rebels to enter the fray. Its Disney Plus on-demand, ad-free streaming service debuted Nov. 12. Disney is widely considered Netflix’s biggest new rival based on its massive and beloved content library that includes films from Disney, Marvel, Star Wars, Pixar, National Geographic and 20th Century Fox. Disney + costs $6.99 a month or $69.99 a year after a seven-day free trial.

The first of these new rebels to launch against Netflix, however, was Apple Inc. whose Apple TV Plus streaming service came online Nov. 1. The service, which is now available in 100 countries, brings exclusive shows such as "The Morning Show", "Dickinson", "See" and more to the iPhone, iPad, Apple TV, Mac, Roku devices and Amazon Fire TV. The content will also be available via AirPlay 2 on LG, Sony and VIZIO TVs in the future. A full subscription costs $4.99 a month.

Morgan Stanley believes Apple TV Plus will be worth $9 billion to Apple by 2025. It also expects Apple TV Plus to have 136 million paid subscribers by that year.

The other rebels include WarnerMedia's HBO Max and Comcast’s Peacock. In the U.S., HBO Max will debut in May 2020 and cost $14.99 per month. Existing subscribers of HBO Now that signed up directly will get access to HBO Max for no additional charge. HBO Max will be free for one year to HBO subscribers who subscribe to one of AT&T’s TV services.

Netflix has no reason to immediately worry about the challenge posed by these deep-pocketed rebels.

“Netflix is likely to see some incremental churn from new competition -- but it should be modest,” noted Nat Schindler, an analyst at the Bank of America. “We continue to see Netflix as a staple in TV streaming and we think Netflix’s 4Q subscriber guidance was reasonably conservative."

Many of the other major Wall Street analysts following the streaming wars have similar opinions but investment bank Needham & Company begs to differ.

“We project NFLX will lose 10mm US subs during 2020 unless it offers a service priced below its core $13/month service,” wrote Needham managing director Laura Martin.

Vijay Jayant of investment advisory firm Evercore ISI shares Schindler's view.

“Competition unsurprisingly another theme ... we continue to expect competition will have a bigger impact on Netflix’s content costs than on subscriber or pricing growth," said Jayant, who is Senior Managing Director and Head of Evercore ISI's Media/Entertainment and Cable/Satellite & Telecommunications research team.

John Blackledge, managing director and senior research analyst at investment banking firm Cowen Inc. gave Netflix an Outperform rating at $435. He said their "latest U.S. survey data suggests NFLX maintains its lead in the living room, particularly among younger demos ... Our view is that Disney + is not a substitute for Netflix’s breadth/depth of content, and we also believe Video is not a zero sum game, with several winners poised to benefit from burgeoning WW streaming trends even as NFLX remains years ahead of competitors.”