Deeper Dive – Exploring the myth that Disney + will be the death of Netflix

As an angry Zeus throwing lightning at the top of Mount Olympus, Disney will torch the video market and kill Netflix by the end of the year, in the burning sight of an investor. awake badyst.

In a Forbes article – which to date has nearly 3.5 million views! – RiskHedge badyst Stephen McBride presented unreliable and unreliable figures on cable viewers before arguing that Netflix days could be numbered. He said that Netflix only changed the way people watch their videos and not what they watched (he quoted "The Office," which, to be fair, is extremely popular on Netflix). He also said that Netflix was getting into debt to keep its original content delivery schedule fast, which is also true. In the last quarter, Netflix reported long-term debt of $ 10.3 billion.

All this is based on McBride's thesis: Netflix has only 175 days to prepare before Disney +, the death-bearer, destroyer of worlds, launches and eviscerates Netflix.

Disney will do so by offering the best possible content – such as Star Wars and Marvel movies, and Netflix and a range of original movies and series based on already popular franchises. Disney has a great library, which certainly defies Netflix's own library of original series and films. McBride thinks it will be enough to remove millions of Netflix subscribers who are moving to Disney +.

But it is there that lies the fundamental flaw of McBride's logic: Netflix and Disney + are not necessarily a proposition or another.

Alan Wolk, co-founder and senior badyst at TV [R] EV, reiterated his belief that many consumers would probably keep Netflix even if they were getting Disney +.

"It will take a while before people decide to get rid of Netflix," said Wolk.

A complete and complete abandonment of Netflix is ​​unlikely, but a high churn rate levels can happen. Wolk said that there would be a lot of imbalances in all SVODs, especially for newcomers like Apple, Disney, NBCUniversal and WarnerMedia, as consumers would find out what each service is and how they fit in. to their de facto channel bundles.

"Everything will depend on the programming and all those who will have success," said Wolk, comparing what was going to happen to the "flixes" to what the big broadcast networks had usually been going through sitting in turn on the throne of prime time.

Is Netflix vulnerable?

Although it seems unwise to predict that Netflix will die in less time than it takes to build a home, it's not entirely impossible to find weak points strategy of the company.

Wolk said that Netflix had some alarm signals, including the already mentioned loss of important content for the library and the huge amounts spent on constantly broadcast content, reducing the risk of significant loss. The media hype cycles that windowed content such as "Game of Thrones" have been successful.

Yet the Netflix originals remain the main reason people join the service. The content of the licensed library is largely library content, but that's why people are watching Netflix more, not why people subscribe to Netflix, "said Wolk. If Netflix ends up losing "The Office" and "Friends", it's possible that another library content will appear to become its comforting content.

But recent polls suggest that the loss of popular libraries the content could be catastrophic for Netflix in terms of the loss of young subscribers. Morning Consult polled 2,200 adults this month and found that 49% of Netflix subscribers aged 18 to 29 canceled their subscription if "The Office", "Friends", Marvel movies and Disney content were removed from service.

get a tiny set of data, I asked my friend Andrew if he would cancel Netflix if he had more "The Office". He called "The Office" a "glue show" and said it was about the show that he and his wife were watching. on Netflix when Netflix has no original that interests them. He added that if Netflix was going through a very long drought in terms of interesting programming and that he did not have "The Office" on which to turn, he could cancel his wife and himself.

He also said that there was no way. he would subscribe to the NBCUniversal service even though he was receiving "The Office", but he's interested in Disney +, largely for the original content that will expand the Star Wars and Marvel Cinematic universes. He stated that subscribing to Disney + did not necessarily mean that he would get rid of Netflix, but he added that it could increase the chances of his Netflix subscription increasing and coming back more than he would does not currently.

Even with consumer surveys. and my sample size is very limited, it's still impossible to predict the impact of losing library content on Netflix. And calling the service doomed in the absence of these titles seriously underestimates the appeal of Netflix's original series such as "Stranger Things," "Orange is the new black," " Black Mirror "," The Crown "," You "," Mindhunter, "" Ozark "and" BoJack Horseman ", as well as films like" Bird Box "," Roma "and the upcoming" The Irishman ".

The debt of Netflix could pose problem. The company recently announced a new $ 2 billion bond, which will bring its long-term debt to $ 12.3 billion. As Variety points out, Netflix has still not repaid a significant portion of its long-term debt. Thus, some concerns about Netflix are valid. But the company continues to expand, expand its content base and build consumer loyalty.

The idea that Disney + will be launched on November 12 and kill Netflix is ​​a myth.