Entertainment heavyweight Disney announced last week that it would be yanking its vault of content off of Netflix. Shortly thereafter, shares of the video streaming service spiraled. But, according to analysts, Disney's cord-cutting move may not spell trouble for Netflix in the long term.
"The market always tends to react kind of quickly. It sees this news and it's like, 'Oh God, it's all over for Netflix!' And it's not," Tematica Research CIO Chris Versace told Circa. In fact, for Versace, the bigger concern is that content is being spread too thin.
"You sit there and you go, 'Well, now I have Hulu, Amazon, Netflix, ESPN, Disney…' All the sudden your bill is bloated back up," he said.
We took a poll of Circa employees and the list of streaming subscriptions our collective office holds really runs the gamut: Playstation Vue, DirecTV Now, Pandora, Spotify, UFC Fight Pass, Netflix, HBO Now, Hulu, MLB.TV and Amazon Prime. There were also people with access to Xfinity, HBO Go and Google Play. When you tally those, the subscriptions add up.
Disney's plan is to operate its own paid streaming video platform by 2019, where consumers will be able to view Pixar and Disney original videos. While Disney's move won't impact Marvel movies or Star Wars, Reuters reports, Disney is also launching a separate streaming service for ESPN.
And Disney is betting on fans of its exclusive content to sign up.
However, according to MarketWatch, a new Piper Jaffray survey of 500 current U.S. Netflix subscribers found that just 20 percent spend at least 10 percent of their time on the platform watching Disney content.
"We, therefore, expect almost none of the remaining 80 percent of subscribers would consider canceling due to the loss of Disney,” Piper Jaffray analysts wrote in a note to clients obtained by MarketWatch. "While we recognize the strength of the Disney content, particularly for parents of younger children, [we] believe Netflix can license similar genre content from other sources and/or use the cost savings for original programming."
If Disney succeeds, Versace says other players may follow in its shoes, spinning off their own content – at which point, he says, the world of streaming could quickly shrink.
Just as with mobile carriers, analysts believe there's room for mergers and acquisitions in streaming. "I suspect that at some point there will be some consolidation around not video, not audio, just general streaming content," Versace said.
At what point will people draw the line and drop platforms they've signed onto? If our office poll and the Piper Jaffray survey is any indication, they already have.
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