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A few months ago, I stated that I believe that Disney is a better stock to hold than Netflix right now. I stated this largely because I believed that Disney's streaming platforms would skyrocket past Netflix. When one looks at the IP (intellectual property) owned by Disney, one can easily see how Disney could grow their platforms through the creation of content centered around their IP. Because of their valuable IP, I believed that Disney's platforms would grow very quickly.
In Disney's latest quarterly report, they announced that they added 14.4 million new subscribers during the quarter which puts them at a total of 221.1 million subscribers across Disney+, ESPN+, and Hulu. 152.1 million of those subscribers are on Disney+. Netflix, on the other hand, currently has 220.7 million subscribers.
Disney+ will also be raising its prices soon and launching a cheaper ad supported tier. Netflix is also planning to launch a cheaper ad supported tier as well to help with growth. While Disney has been gaining subscribers, Netflix has been losing them. Last quarter, Netflix revealed that they had lost 970,000 subscribers. By releasing a cheaper tier with ads, Netflix hopes that it can more easily attract users.
Disney did, however, reduce their long-term forecast for subscriber growth on Disney+. By 2024, Disney expects to have around 215 million to 245 million subscribers which is 15 million less than previously expected on both ends of the spectrum. It surprised me to see them lower their forecast. With a cheaper ad supported option coming out, I would have expected them to forecast more growth.
Disney does, however, believe that Disney+ will achieve profitability by 2024. Right now, they are losing money on Disney+. They lost $1.1 billion on their streaming platform last quarter. I believe that this is a big advantage that Disney has over Netflix. Disney can afford for their streaming platforms to lose money, so they can focus on the long-term and spend more money on producing content. Netflix doesn't really have that benefit.
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