Netflix is the default streaming service with the biggest subscriber base across the globe. It has revolutionized the way we watch visual media and has made streaming the norm in the entertainment industry. Netflix caused a paradigm shift from cable to streaming. It started without any competition as the one-stop destination for all your entertainment needs but now it’s facing a real threat. On 12th September 2019, Disney launched its upcoming streaming service Disney+ which is going to be a direct competitor to Netflix. It is the battle between the biggest content studio and the biggest streaming platform where one is trying to be the other. Most of the consumers now have moved from cable to streaming thus Disney is trying to capture this streaming market which is currently under Netflix. In response, Netflix has been trying to create original content to keep its consumers even after the arrival of disney+. Netflix recently bought Millerworld to expand in the domain of animation and capture more audience.

Walt Disney studios include Pixar, Marvel, LucasFilms (Star Wars franchise) and 21st Century FOX. Disney Media Network has ties with ESPN, ABC and A&E networks such as Vice Media, History Channel, and LifeTime Entertainment. This means they own the major chunk of all the large Production houses and have a monopoly on the entertainment industry. Disney owns most of the last 90 years of beloved TV and movies that we all grew up watching. Once Disney’s current licensing deals expire Disney owned shows and movies are all going to disappear from Netflix and other streaming services. Even if Netflix was willing to offer more money Disney would rather have you watch their movies on their service to create an exclusive market for them and them only. Disney excels at making money when the distribution market changes . over the past they have done it again and again. At the time of VHS Disney had Disney vault. The scheme in which movies would be locked away for years and only made available for lucrative limited-run sales. The vault was a success and 55% of Disney fans replaced their VHS Tapes with Disney’s DVDs. Another example is the Cable industry where Disney first licensed HBO to show its content but later released its own channel. Last year Disney earned 40% of its money from cable channels. Thus as we went from cable to streaming Disney is trying to pull the same trick using its massive content library to build a whole new service from the ground up. Other Streaming services had already anticipated this thus Netflix originals like Stranger Things and Bojack Horseman were made to make us stay.

Recently Disney announced its streaming bundle which retails at 12.99$ per month. To put things in perspective Hulu starts at 5.99 per month and ESPN+ for 4.99 per month. The cheapest pack for Disney plus itself is 6.99$ whereas the basic plan that Netflix offers right now is 9.99$ a month. The streaming bundle is to give a head start to the service and initially terminate the existing competition. Netflix also lacks the 4K HDR compatibility which Disney+ promises to provide. Netflix doesn’t have as many movies as Disney has to offer and has absolutely no Sports content. On the contrary Disney + has unbelievable inventory which is catered for everyone.

Disney’s stock price graph

Netflix stock price graph

Since the announcement of Disney+ Netflix’s stocks have decreased and the company has started missing their targets. Of all US streams, 37 % is Netflix originals content hence licensed content is still very critical to the platform. Despite Netflix spending a ridiculous amount of money to create originals the appeal of Netflix lies within its hosting of popular content. As a company, Netflix already has a debt of 8 billion dollars and has spent 18 billion dollars in content spending obligations. It earns all its revenue solely through subscribers and with that massive debt, it is done for if it fails to keep its market share in streaming. Disney has the luxury to turn to other businesses if it fails whereas Netflix does not.

Since Netflix still does have the biggest subscriber base they will still be in the game but a decrease in consumers is a hit that is tough to take for a streaming-based company. Disney has already taken down all the marvel movies and is soon taking down the Marvel TV series. Original content that Netflix is creating is saturating making it more prone to get a hit when the market shift takes place.

In conclusion, if Disney+ is executed the way it’s supposed to be, it can easily steal a chunk of the market from Netflix. Netflix knows this and has started to create a library of its own to prevent its current subscribers from going away. None of them are disappearing anytime soon but we are yet to see how much market can be captured by disney+ and how well can a streaming company like Netflix stands against a massive corporation like Disney.