The streaming market is getting some real heat with this new rivalry going on between Disney and Netflix. There are no doubts about both the company’s competencies as both entertainment leaders have what it takes to beat the market over the long haul. Here is FinanceShed’s analysis of the present conditions and future expectations of these stocks and whether to Buy Disney Stock or not.
If we talk about the performance and operations of the companies, Netflix is more about licensing movies from other studios such as Disney and also produces its own original series and earn from the subscribers that join by way of a monthly subscription. On the other hand, Disney is a diversified company having its multiple diversified ranges of products and services such as resorts, studio, and entertainment, etc.
The battle to become the number one company is getting bigger and will have some sharp changes once Disney launches Disney+ this November. Along with the video service, Disney+, Disney is also about to launch a bundled video package that includes Hulu and ESPN+. The market is getting volatile and both the companies are setting themselves up for the bigger battle and to provide classic services to their customers.
The Market Condition
Netflix’s standard plan costs range from $10.99 to $12.99 which is for a monthly subscription to the streaming services. Disney announced a plan that is almost half of Netflix’s monthly subscription. Disney announced a plan that costs $6.99 to the subscribers and that too giving an additional subscription for Hulu and ESPN video services.
This could be a major setback for Netflix as it will lose the price-sensitive customers. Disney is doing great after the announcement of the direct streaming services by the company while Netflix lost a huge chunk of customers in the second quarter affecting the revenue a great deal.
However, the PE ratio of Netflix is 55.74 whereas that of Disney is 21.32. In the market, Disney is trading at 4.2 times its trailing revenue which is nearly half of Netflix’s proportionate trailing revenue. The momentum is shifting and Disney is at the upper side because of the bit hits it is giving through this year. In spite of these changes, the value of stocks has continued to move upwards of both the companies and both the companies are above the S&P average of 11.
The Hidden Aspects
After the announcement of Disney+, Netflix’s shares have declined by about 12%. This downfall is not just because of the entry of Disney in the streaming market but also some of the most famous and most viewed contents are to be lost and getting an exit from Netflix such as Warner Media’s Friends, and Disney’s Grey’s Anatomy.
Netflix is also struggling with the content, as to maintain this momentum it has to increase the amount and quality international content available on its platform. To remain the king of the streaming market, Netflix has to boost its quality and international content.
Undoubtedly, Netflix is facing trouble in keeping its No. 1 position in the streaming market but Disney also has some hurdles while entering this market. As the company needs to be reorganized and has to create a direct to customer international unit a huge change in operations is required here.
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Both the companies are doing everything that takes to be the leading player in the global streaming market but for the actual scenario, one has to wait till November 2019.