The race for premium streaming video leadership basically boils down to Walt Disneysay (NYSE: DIS) Disney + en Netflix (NASDAQ: NFLX). The latter will always be in the conversation. Netflix starts 2020 with 203.7 million paid memberships worldwide and by the end of next month it expects to be around 210 million.
Disney + has less than half of Netflix’s premium figures, but is growing significantly faster. It exploded to 94.9 million premium subscribers in early January, an amazing achievement for a platform that hadn’t even been around 14 months before.
Of course, Disney has a lot more to offer than Disney + – and we’ll be getting there soon – but it’s a great place to decide which darling belongs in your portfolio. Is Disney the better buy? Is Netflix the better addition? Let’s dive deeper to see which one should be at the top of your shopping list.
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Nothing but Netflix
Disney + is growing much faster than Netflix, of course, but let’s not assume that the best dog is a slowpoke. At the end of the third quarter of 2019, weeks before the launch of Disney +, there were 158.3 million premier accounts on their roles. The 45.4 million net additions he has achieved since then are less than half of Disney’s market grip, but Netflix’s dominance is more than just a raw number of viewers.
The Netflix model is price elastic. This raises the price of his most popular plan this year, something he has now done five times since early 2014. Average income per membership has risen from $ 9.88 to $ 11.02 per month, despite being cheaper international markets pressed and had headwinds in the foreign exchange.
Disney + costs significantly less than Netflix, and the average revenue per membership has dropped since its launch as it offers its platform abroad with more affordable rates in developing international markets. Disney’s monthly average revenue per user has dropped from $ 5.56 to $ 4.03 in the past year. In a new way, we are talking about Netflix with a revenue rate that translates to $ 2.2 billion a month – almost six times greater than Disney + at $ 382 million.
The scale of Netflix has an advantage. If you want to sell a new movie or show, you want Netflix to reach the largest possible audience. No business can spend as much as Netflix without breaking the bank, because it can split the programming costs by the largest paying audience.
Netflix must win this battle? Right? Well, Mickey Mouse.
The mouse always wins
If it was just a Disney + fight against Netflix, the nod would of course go to Netflix. Disney’s market capitalization of $ 347 billion is $ 100 billion greater than that of Netflix. However, Disney’s namesake-direct-to-consumer-streaming service is only a small part of the empire here. Disney + may be the business that produces all the luxury news, but currently it’s only 7% of media inventory revenue.
At the moment, Disney + is not even the largest money maker among the streaming services. Hulu, which is owned by Disney, actually generates more than twice the revenue of Disney +. Investors also get the world’s most visited theme parks, ABC, and a majority stake in ESPN.
In a world where content dominates, Disney owns Pixar, Marvel and Lucasfilm. It’s a portfolio of intellectual property that could expand the six highest-grossing films of 2019 – you know when we went to the movies earlier.
Netflix is great, and even when Disney runs on all cylinders, Netflix will still be the fastest growing company. I own shares of both companies, so I believe both shares can beat the market. Since Disney offers as much as its fast-growing Disney + platform, it’s the best buy here.