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How Disney+ Could Become Netflix’s Biggest Rival on Day 1

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  April 22nd, 2019  By John Puterbaugh

Netflix doesn’t seem too worried about the new Disney+ streaming service announced last week, but Disney’s biggest home video play since its infamous “Vault” could be in line for a strong start when it launches this fall.

A survey of 1,000 U.S. Netflix subscribers in the days after Disney’s announcement showed 25 percent said they’d be interested in keeping their Netflix accounts and adding Disney+ at $6.99 per month. And 4 percent said they’d drop Netflix for Disney+ instead. Assuming Disney+ competes in the same global space as Netflix and the sentiment holds outside the U.S., Disney has plenty to be excited about with its new service.

Do the math based on our findings – and this Bloomberg report that puts Netflix’s subscriber count at 148.9 million – that amounts to 43.2 million subscribers right out of the gate. Not too shabby.

That would immediately put Disney+ between Netflix and Hulu, which Variety reported in January as having reached 25 million subscribers (Hulu currently is only available in the U.S. and Japan). Depending on whether or not you count Amazon Prime’s 100 million subscribers, which could be misleading since the Prime video service is just one of several perks of Amazon Prime membership, Disney+ could find itself behind only Netflix in terms of streaming service subscriber counts.

Netflix not too concerned about competition

“We don’t anticipate that these new entrants will materially affect our growth because the transition from linear to on demand entertainment is so massive and because of the differing nature of our content offerings,” Netflix stated in its first quarterly earnings report for 2019.

The letter went on to compare the anticipated growth of Netflix and other streaming providers to the way cable providers grew and expanded as consumers shifted away from the broadcast networks in the ’80s and ’90s.

Who is mostly likely to subscribe to Disney+?

So who exactly might these 43.2 million Disney+ subscribers be? It’s easy to imagine parents of younger children being attracted to a Disney service, but, as we pointed out last week, the service will also include the wider domain of Disney content, such as the “Star Wars” and Marvel properties, as well as 30 seasons of “The Simpsons.” (Does knowing there are 30 seasons of “The Simpsons” make you feel as old as it makes us feel?)

It does appear “Star Wars” and the Marvel collection might have a stronger pull among Netflix subscribers than Disney’s vault of family content, as our survey showed Gen Z Netflix subscribers (ages 18-24) are most likely to keep Netflix and add Disney+, with 30 percent of them saying they’d do just that. Among that age group, 34 percent of female Netflix subscribers said they’d be interested in adding Disney+, with 24 percent of males saying the same.

Netflix subscribers between the ages of 25-34 were the next most likely group to add Disney+ to their Netflix accounts, with 26 percent saying they’d sign up. While this age group is likely to include a greater count of parents of young children, they’re not exactly breaking down Disney’s door for the new service. Even without Disney content, Netflix still has a respectable offering when it comes to children’s programming, with an increasing number of original children’s shows (“Beat Bugs,” anyone?). Which leads us to wonder: Do parents of small children really care whether their kids can watch Disney programming when they put them in front of a TV?

How much is too much for Netflix subscription?

Our survey shows 78 percent of Netflix users say the recently announced higher price of $12.99 per month is the most they are willing to pay for the service. Netflix even acknowledged the company anticipates some slower growth in response to the new pricing. In its shareholder letter, Netflix said the response to the price hike so far has been similar to the response of a 2018 price hike in Canada, where “our gross additions are unaffected, and we see some modest short-term churn effect as members consent to the price change.”

The state of streaming

So what does it all mean in a rapidly evolving streaming scene? If the findings of our survey bear out, these are very promising numbers for a nascent streaming service that’s still months away from going live. It could be evidence the streaming market hasn’t yet reached saturation point, even if it has been heating up lately (see Apple’s recent streaming service news). As we’ve noted before, streaming TV is starting to look an awful lot like cable, and if other potential players see it the way our survey suggests could be the case, the splintering and segmenting of streaming services is likely to continue.

Here are a few of our other interesting findings from the survey:

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