As Disney+ soars to new heights, Netflix is coming off another bad month.
The streaming pioneer had this to say about the news: “Our slowing revenue growth means we are also having to slow our cost growth as a company. These changes are primarily driven by business needs rather than individual performance.”
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The layoffs come after a series of blows to the streaming provider. First, just a few months ago, Netflix announced plans to crack down on password sharing with two new features that would be tested first outside of the country. It was recently disclosed that the test is not going well.
Then came the announcement Netflix lost 200,000 subscribers, with predictions that they will lose more in the coming months. That news sent its shares plummeting 35%.
Netflix’s recent disappointments have many speculating as to the future of streaming. While CNN+ didn’t even last a month, newer platforms like Disney+, HBO Max, and Paramount+ have quickly achieved success.
Disney+ Emerges as a Streaming Leader
Disney+ announced that they added 7.9 million subscribers last quarter, bringing their total subscribers to 138 million worldwide. The streaming service combines a mixture of classic films, hidden gems, and blockbuster franchises like Star Wars and Marvel. They credit part of their recent success to Pixar’s Turning Red, which premiered on the platform.
While their successes could appear obvious, the news allowed Walt Disney Co (NYSE:DIS) to breathe a sigh of relief. The company was nervous that its voice in politics could have had negative consequences. Chief executive Bob Chapek has faced backlash after the company spoke out against Florida’s “Don’t Say Gay” bill.
Not long after coming out publicly in opposition to the bill, Florida governor Ron DeSantis and the Florida legislature came together to strip Disney of its special tax status – which essentially allowed the theme parks to function as their own government – a perk they’ve had since 1967.
Later this year, Disney+ has plans to offer an ad-supported plan, which they believe most of their subscribers will select. According to Disney+ CFO Christine McCarthy, Disney+ expects ads to enhance the average revenue per subscriber.
With Disney+ confidently rolling out this new reduced-cost option, maybe Netflix will follow suit. Rumors abound that the streaming giant is strongly considering such a move that could positively alter its trajectory.
Business Insiders Weigh In
With a plethora of streaming services available for consumption and even more on the way, what you choose to subscribe to is an important economic decision in any household. And as some streaming platforms rise to the top, it’s a great time to consider investing in these future streaming juggernauts.
For Carter Seuthe, the CEO of Credit Summit Consolidation, the answer is simple: invest in Hulu. “What makes Hulu different,” he says, “is that you can choose to also get live TV with it, so you can essentially get all of the channels and a streaming platform in one, eliminating your need for cable.”
While streaming services were once thought to spell certain doom for cable and live television, Hulu proves that there is still an audience wanting to watch live TV.
Carter does concede one point: the success of these platforms can change on a whim. “All it takes is for one platform to get the rights to a really popular show for it to become the leading platform.”
With so many streaming services paired with networks, shows will be less likely to be streamed outside the studio that originally produced them. Recent examples include Netflix losing Friends to HBO Max and The Office to Peacock.
“Four of the biggest film studios have formed media conglomerates by combining with major television networks,” explains Janet Patterson, a loan and finance expert. “By 2025, it is expected that all four conglomerates will become exclusive to their own streaming services and will not provide new content to other providers,” she says.
She says it all comes back to ad spending when it comes to investing. “In 2021, the ad spending for streaming platforms increased by 34%, which was five times higher than ad spending for broadcast or cable.”
While Netflix may stand on uncertain ground, other streaming services can rest easier with something to fall back on. “The streaming platforms that will succeed are those that are tied to other products within a company,” says Marina Vaamonde, a real estate investor and the founder of HouseCashin.
“Disney is tied to its juggernaut amusement parks across the world while Apple has its multitude of tech products to rely on for profit,” she explains “hence these companies can afford to bundle their services and acquire new customers at a lower cost.” These benefits are something Netflix and Hulu can’t compete with.
With Netflix losing subscribers, the streaming service may be in desperate need of a comeback, and despite the high volume of success for the new season of Stranger Things, if it doesn’t make a bold move soon, it could be left in the streaming graveyard as Disney+ takes center stage.
This post was produced and syndicated by Wealth of Geeks.
