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Good Luck Killing Netflix

By Rick Munarriz - Nov 24, 2019 at 2:00PM

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The pace of Netflix cancellations reportedly isn't accelerating despite the arrival of Disney+ and Apple TV+.

Your choices for star-studded premium streaming services have expanded dramatically this month, with Apple ( AAPL -1.17% ) and Disney ( DIS -0.67% ) launching their buzzworthy platforms, but Netflix ( NFLX -2.33% ) is apparently not missing a beat. Bloomberg is reporting that internal Netflix data shows that defections aren't accelerating despite the arrival of Apple TV+ and Disney+ earlier this month.

Netflix isn't going to be the big winner this quarter. Disney+ topped 10 million subscribers a day after its launch, already ahead of the 7.6 million net additions worldwide that Netflix has been modeling for the entire quarter. However, if Bloomberg's source is on the level -- and there's no reason to believe it's not -- the chances are pretty good that Netflix will be able to meet if not exceed its earlier guidance. This may not seem like a big deal for a company that has historically been conservative with its quarterly projections, but after falling short of its subscriber target in back-to-back reports, the company that started the whole premium streaming revolution could use a victory lap.

The cast of Netflix's GLOW getting ready to fight.

Image source: Netflix.

Binge sign-ups 

This was never going to be a winner-takes-all battle, and even with Netflix and Disney combining to add 17.6 million viewers this quarter, that doesn't mean it's happening at the expense of rival services. We're spending more time streaming, and the only real losers are the cable and satellite television providers. Outside the large players in linear pay TV that also have strong roles in providing broadband connectivity, that is the industry that's going to bear the brunt of the hyped arrival of Apple TV+, Disney+, and the new platforms that will launch in the coming year. There will be plenty of strong growth stocks in this niche. 

You can subscribe to the most popular Netflix streaming plan as well as Disney+ and Apple TV+ for $25 a month, and if you've recently bought an Apple device, you probably don't have to pay for your first year of the consumer tech giant's new service. If you still subscribe to a cable or satellite television plan, you probably spend a lot more there than you would if you signed up for the 10 most popular streaming services. 

Still, Netflix isn't in the clear. The only thing easier than signing up for a streaming video service is cancelling it, and consumers will be chasing shiny new content. I have long argued that Netflix will be the equivalent of basic cable in the world of streaming video, but there are going to be a lot of platforms competing for attention in the crowded future.

The good news is that Disney+ isn't going to sign another 10 million subscribers next quarter. Apple TV+ isn't likely to be a major factor until it beefs up its catalog of content. Netflix can, and should, get back to padding its lead next quarter. It's still on top, and that's not going to change anytime soon. 

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.

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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
$602.13 (-2.33%) $-14.34
Apple Inc. Stock Quote
Apple Inc.
$161.84 (-1.17%) $-1.92
The Walt Disney Company Stock Quote
The Walt Disney Company
$146.22 (-0.67%) $0.98

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

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