Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Can Apple TV+ and Disney+ Beat Netflix?

By Ella Vincent - Nov 8, 2019 at 6:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The streaming giant faces stiff competition from new services.

Netflix ( NFLX 2.10% ) is the biggest name in streaming services, with a record $5.2 billion in sales in its Q3 earnings report. However, Apple ( AAPL 3.55% ) and Disney ( DIS 0.29% ) are entering the streaming space, looking to share — or take — some of Netflix's 60.2 million U.S. subscribers. Apple TV+ launched Nov. 1, and Disney+ will debut Nov. 12.

Homes are connected with beams of light

Image Source: Getty Images.

With 60% of Americans consuming content through streaming services instead of cable, many entertainment companies want to increase viewership with subscription video-on-demand options. Investors will be watching whether the additional streaming choices will help Apple and Disney's stock prices.

Will Apple TV+ have enough shows for subscribers?

As part of a promotional deal, Apple TV+ is free for a year for iPad and iPhone users with the newest devices. The service is $4.99 a month for a family plan for customers who don't have the upgraded Apple devices. AppleTV+ is much more affordable than Netflix's premium package, which costs $15.99 a month. The affordability is sure to entice potential subscribers. 

Apple has a $6 billion budget for original programming from stars such as Oprah Winfrey and Jennifer Aniston. Oprah's Book Club and Aniston's critically acclaimed new The Morning Show may bring in subscribers, but the slate of shows offered is minuscule compared with Netflix's thousand. Apple TV+ only has eight series and one movie available. In contrast, Netflix has about 1,500 hours of content subscribers can binge for hours. 

Apple's fourth-quarter earnings rose 2% to $64 billion on the strength of services like Apple Music. While it's possible that Apple TV+ will help to attract subscribers and thus boost the stock price, it's more likely that the built-in customer base of iPad and iPhone users will be the main users.

Disney+ brings beloved franchises to streaming service

Disney+, on the other hand, could be a game-changer. Disney has invested $2 billion in its streaming division, and that money may pay off. The company's vast library -- it plans to offer 500 movies and 7,500 episodes of a wide variety of series within a year — will make it a strong competitor to Netflix.

Devoted fans of franchises like Star Wars may be drawn in by original series such as The Mandalorian, while classic Disney films like The Lion King will retain Disney loyalists. Disney+ is a bargain compared with Netflix, with a monthly subscription cost of only $6.99. Disney's Q3 earnings report improved by 33% year over year, with revenue of $21.5 billion, thanks to blockbusters including Avengers: Endgame. The stock price could rise if popular titles attract a substantial amount of subscribers. 

How will Netflix respond to competition?

With money! Specifically, Netflix is investing $2 billion in new content through sales of junk bonds. Management hopes that by adding more programming, including some of Disney's own Marvel movies, they can maintain control of the video-on-demand space.

Ultimately, Netflix investors will continue to benefit from the company's vast collection of content and its position as a premier streaming service. Tech investors and those interested in doubling down on the streaming space may find Disney another good investment, especially because of its other sources of revenue, such as its TV channel and theme parks. There's space for both in streaming.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$171.18 (3.55%) $5.86
Netflix, Inc. Stock Quote
Netflix, Inc.
$625.58 (2.10%) $12.89
The Walt Disney Company Stock Quote
The Walt Disney Company
$150.81 (0.29%) $0.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.