If we're to believe the worrywarts, Netflix (NASDAQ:NFLX) is starting to hear footsteps. Apple (NASDAQ:AAPL) launches its new Apple TV+ streaming video service on Friday. Disney (NYSE:DIS) follows with its rival platform 11 days later.
Netflix has fallen short of its subscriber forecasts in back-to-back quarters. How can it possibly live up to its guidance for the current quarter with Apple TV+ and Disney+ to deal with now?
Netflix will be just fine. Let's go over the reasons the leading premium streaming service will continue to be the leading premium streaming service.
1. You have more time than Apple TV+ has content
Apple has a star-studded lineup of original shows debuting on Friday. Unfortunately, we're talking about just four serialized dramas, three shows for young children, an elephant documentary, and the first installment of Oprah Winfrey's book club series.
This isn't the complete slate of programming that will eventually be available on the platform. There will be a trickle of new series launching as early as December. However, let's break down the actual hours of content available on Friday. You won't be able to truly binge watch these shows. The four serialized dramas will launch the first three episodes on Friday. Weekly installments will then follow through early to mid-December. Winfrey's book club show will have a new episode every two months. The elephant documentary is 96 minutes long.
We know that folks spend a lot of time streaming. Roku's (NASDAQ:ROKU) 30.5 million users spent 9.4 billion hours on the platform in the second quarter, or 23.7 hours a week. It would take you roughly 4 hours to catch all four of the serialized dramas once you get to the fresh installments in the second week. What are you going to do for the other six days in your streaming week? Apple's catalog will expand over time, but for now, it's a marginally complementary offering. You're going to need more. You're going to need Netflix -- or at least Hulu, Prime Video, or whatever you're currently relying on as your primary source for on-demand video entertainment.
2. Disney+ also has its blind spots
Disney is unlocking a much larger vault of content than Apple for its Nov. 12 launch, but even the House of Mouse isn't the complete service that Netflix is now. There's no shame in that. Netflix has a dozen years of curating streaming content under its belt. It will take Apple and Disney time to sift through the hits and misfires, collecting the data to green-light or acquire the content their audiences crave.
There is no doubt that Disney+ will draw a crowd. It's not all Mickey Mouse for a company with Marvel, Lucasfilm, Pixar, and key Fox assets in its arsenal. Disney+ is going to take more than just a couple of hours a week to get through. However, it will ultimately be a challenge to get the balance right. Where are the saucy foreign serialized dramas? Will older movies need to be recut to snip out smoking? Is social media going to fire up with critiques by Disney evangelicals whenever a new show spins the moral compass to keep up with everybody else? Disney's brand is widely admired, but that public sentiment might also restrict what it can do in this space.
3. Expanding the market means more winners
Disney+ and Apple TV+ will have no problem rolling out with significant audiences. The services are cheaper than most existing premium offerings, and they're locking in new viewers for at least a year with promotional offers. We also have other exciting services including Peacock and HBO Max that will roll out in the coming months. This doesn't have to end badly for Netflix.
Apple, and to a larger extent Disney, will inspire more traditional cable and satellite television customers to "let it go" as Frozen's Elsa would say. The number of homes streaming on a more regular basis will expand dramatically this holiday season, and there is nothing that Apple or Disney is doing to make me toss out my springtime thesis that Netflix will be the "basic cable" equivalent of the streaming experience. Netflix will be the core platform that folks stack with specialized services, and the arrival of Disney+ and Apple TV+ will only expedite the migration process.
The exodus from conventional pay TV is going to happen anyway. Content is moving online, and if that doesn't do it, wait until the next recession turns television buffs into streaming pros to shave their entertainment overhead. Apple and Disney will help -- not hurt -- Netflix.