- Netflix faces competition with Amazon and Disney
- Disney announces a competitive package
- Overlooked factors that may favor Netflix
- The wisdom of stock index funds
The streaming market is shaking up with the rise of new competitors.
Giant Netflix has led the way in streaming services since its inception in 1997. That puts Netflix at nearly a 10-year advantage over its two main competitors Amazon and Disney.
Despite specializing in streaming services and building a beloved brand over the years, Netflix reported its first loss in subscribers in almost a decade.
Investors are concerned that Netflix stock may plateau, or even decline, due to increased competition from Amazon and Disney.
The picture above shows Netflix’s stock value during 2019 so far. It’s worth $310.83 as of August 12, 2019.
Currently, the company has over 150 million customers and is the 7th largest website by revenue.
Amazon counts over 100 million Prime users. However, it’s unclear if all of these Prime users are using Amazon’s streaming service since there are multiple reasons for buying Prime.
Disney’s streaming service Hulu has more than 28 million subscribers. And recently, Disney announced a new streaming package.
Disney announces a competitive package
Disney CEO Bob Iger held a conference call on August 6th to report earnings for the third quarter of 2019.
Iger announced that Disney would launch a package option on November 12th. They will offer fans Disney+, ESPN+, and Hulu (with ads) for $12.99.
This is the same price as Netflix’s most popular package. That means fans will have access to three streaming services for the same price of accessing Netflix’s singular streaming service.
A compelling deal for a lot of stream lovers.
Alternatively, Disney users can opt to buy just one of the streaming services: Disney+ for $6.99 per month, ESPN+ for $4.99 per month, or Hulu $5.99 per month.
This aggressive pricing has led some analysts to predict Disney as a future winner in streaming services.
Investors question if Netflix stock will decline in the coming months due to Disney’s package launch.
Potentially overlooked factors
Despite concerns that Netflix stock may drop, some are cautiously optimistic, pointing out overlooked factors.
For one, is the streaming market a zero-sum game? More Amazon Prime subscribers does not necessarily mean less Netflix subscribers.
In many cases, stream users subscribe to multiple services since they offer different selections of products and original content.
Secondly, price isn’t the only variable that affects consumer decisions. Stream lovers also care about selection, video quality, load time, user interface, and customer service.
And lastly, it is worth pointing out that Netflix is specialized in streaming while Disney and Amazon are not. Amazon and Disney have their hands in multiple projects.
In other words, Netflix has the experience and skill to outperform the competition, even though Amazon and Disney are household brands.
Disney’s package announcement is still fresh. Netflix hasn’t responded yet and may retaliate in the coming months to curb customer loss.
The wisdom of index funds
The lesson we learn here is one we often return to. With the uncertainty of the rise or fall of Netflix stock, investors must ask themselves how to ensure returns.
The answer is a stock index fund. The easiest way to guarantee profits is to invest in all three companies. This way you invest in the collective streaming market rather than putting all your eggs in one stock.
And beyond these, find and use a stock index fund that will spread risk across several industries. A popular option is Vanguard’s 500 Index Fund.
Keep your eye on Netflix. It’ll be interesting to see how they respond in the coming months and how it affects their stock.