Netflix vs. Disney: The Video-Streaming Wars
With celebrated original contents including House of Cards and The Queen’s Gambit, Netflix has garnered 195 million subscribers, contributing to a 60% rise in its stock price (Wall Street Journal, 2020). To compete with Netflix in the video-streaming market, Disney has launched its streaming service– Disney plus in 2019, investing 8 billion on original content to attract subscribers leveraging its classic IP such as Star War. The launch of Disney plus results in a 20% rise in Disney’s stock price. While investors have a high expectation of the future of Disney plus, some analysts believe that to compete with Netflix, Disney will have to address three major challenges.
Disney leverages its well-recognized brand and famous IPs as equity to generate a large amount of content on its streaming service. While this may attract the millennials who grow up watching Disney films, this may as well be a disadvantage for Disney as people associate Disney with family-friendly movies. This impression attached to Disney’s brand image limits people’s expectation on the content they see on Disney plus– people go to the platform when they want to watch Frozen, Finding Nemo, etc., and do not expect to see anything “new” on Disney plus. On the other hand, the original content provided by Netflix has amazed the audience for its innovative themes and diverse topics. For example, Orange is the New Black, a show set in a female prison, has attracted a global audience for its groundbreaking storyline.
Another major contributor to Netflix’s success is its highly-developed algorism. Netflix tracks consumer data, including their gender, region, the type of films they browsed, the devices they use, the frequency they log on the platform, and so on, to understand customer behaviors and suggest films accordingly. To compete with Netflix’s recommendation system, Disney acquired BAMTech, a data analysis company, hoping to develop a powerful algorithm for its platform as it is gaining traction with 26.5 million subscribers in 2019 (Mary Kelly & Christopher Swan, 2020). Whether Disney plus can create a recommendation system as advanced as that of Netflix becomes the driving factor to win market share.
As the first mover in the online streaming industry, Netflix has taken up a significant amount of global subscribers since 2012. To compete with Netflix for the international market, Disney faces a major challenge: Netflix has contracted with production studios around the globe, as a means to tailor to the preference of local markets, while Disney’s content consists of blockbuster Hollywood films which may not be favored by regional audiences. To address this issue, Bob Iger, the former CEO of Disney, has collaborated with major production studios including 21 century Fox, as well as global talents and production teams, with an aim to create more diverse content for different target markets.
Will Disney plus threaten Netflix’s dominant position in the online streaming industry? Netflix has impressed the global audience with its speed of growth and innovative original films, while Disney possesses significant resources under its belt and a long-standing reputation. It is a fierce war between the two, and viewers around the globe are ready for the show!
