WASHINGTON, February 10, 2020 - Netflix will lose and Disney+ will win the streaming wars, said Laura Martin, an equity analyst at Needham & Co. at an event of the Technology Policy Institute on Thursday.
Martin offered her expert prediction and argued that Netflix will fail because its price point is too high versus a Hulu service as low as $6 a month.
Martin also criticized Netflix’s rigidity in not offering a bundled package, as “bundles lower churn,” or the rate at which consumers opt out of subscriptions.
She also said that the fact that Netflix has not grown with domestic users for the past five quarters spells trouble for the company.
She contrasted this with Disney+’s business model, in which the company owns its own streaming content and controls a massive content library. Indeed, Disney is responsible for 40 percent of all Hollywood revenue.
The rollout of Disney’s streaming service consisted almost entirely of advertised movies, which have been shown to increase subscriber switching. Furthermore, it has maintained a large library of television, which has been shown to keep subscribers once they’ve joined.
Martin, however, did admit that Netflix CEO Reed Hastings is “a genius” and that Netflix’s trajectory may surprise her.
Martin also commented on some of the other streaming services offered by cable such as the new Peacock service offered by NBC. She criticized Universal’s decision to not piggyback off the Universal brand (theme parks, movies) because it is much more work to build a brand from scratch with an indirect name like Peacock.
On the other hand, HBO doesn’t need to worry if its streaming service HBOMax fails, because it will ultimately make money by bundling streaming with its cell service, Martin said.
For the future, Martin highlighted eSports. In a world where a 16-year old wins a $3 million check for playing Fortnite and colleges offer scholarships to talented video gamers, Martin predicts that mothers will “back off” from scolding their tech-addicted children and that the industry will radically grow.
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