One of the biggest questions on the minds of Netflix (NASDAQ:NFLX) investors is whether the company can maintain its growth trajectory now that Disney (NYSE:DIS) has so successfully launched its rival streaming service. The House of Mouse announced on the day after its debut that Disney+ had signed up 10 million viewers by the end of its first day of operations. While there's been no official follow-up, some projections placed its subscriber number closer to 25 million to close out 2019.

Shareholders will be keen to see if Disney's success has come at the expense of Netflix when the streaming pioneer reports the results of its 2019 fourth quarter after the market close on Jan. 21. Let's look at what we know so far, and why this quarter will be particularly important for Netflix's future.

A man with a stern look holding a sword.

Henry Cavill as Geralt of Rivia in a scene from the Netflix original series The Witcher. Image source: Netflix.

Are they or aren't they?

Investors have been getting mixed messages about whether the rapid rise of Disney+ is costing rival streamers -- particularly Netflix -- viewers' time and money.

A report released on Dec. 11 by market intelligence company Apptopia said that while the Disney+ app had been downloaded 22 million times in the first four weeks since its launch, "competitors remain largely unaffected in terms of their performance," adding that rival app downloads and user sessions were "uninterrupted from their trend lines." Focusing specifically on Netflix, the report showed that while there was a brief dip in mobile app sessions, they quickly recovered, remaining historically consistent. 

A study by Bank of America analyst Nat Schindler seemed to confirm those findings. The survey of more than 1,000 U.S. consumers found that 65% of early Disney+ subscribers don't consider the service as a substitute for Netflix, and only 6.5% of users that subscribe to both said they planned to drop Netflix.  In a subsequent survey, that number fell to about 5%, which is consistent with normal churn. 

Not everyone is so sure. A survey of more than 200 streaming video subscribers conducted on Dec. 29 by Rosenblatt Securities analyst Bernie McTernan found that 59% were Disney+ subscribers, and among those, 29% said they had unsubscribed from a competing streaming service, with 9% specifically identifying Netflix as the service they dropped. 

The single most important metric

Despite its consistent revenue and profit growth, the investment community has long been obsessed with Netflix's subscriber numbers. If you have any doubt about that, look back at the second quarter when Netflix lost roughly 100,000 domestic subscribers and gained 2.7 million internationally -- a far cry from the 5 million additions management had forecast. In the two months that followed, Netflix stock slumped as much as 30%.

That wasn't the first time either. In the second quarter of 2018, Netflix reported subscriber additions of 5.15 million, more than 1 million shy of its forecast. In the weeks that followed, the stock shed more than 20% of its value, showing just how important subscriber growth is to Netflix investors.

A woman with a somber expression hanging her head.

Scarlett Johansson in a scene from the Netflix original movie Marriage Story. Image source: Netflix.

Even Netflix doesn't know what's in store

In its third-quarter report, Netflix acknowledged the pending arrival of some potent new competitors, admitting it wasn't sure what the short-term impact would be on its business. "The launch of these new services will be noisy. There may be some modest headwind to our near-term growth, and we have tried to factor that into our guidance." The company is somewhat more confident about its long-term prospects, saying that "we expect we'll continue to grow nicely given the strength of our service and the large market opportunity." 

For the fourth quarter, management forecast revenue of $5.44 billion, up 30% year over year, and earnings per share of $0.51, up 70%. More importantly, the company expects to add 7.6 million new customers during the quarter, including 600,000 new domestic subs and 7 million international additions. That would represent year-over-year growth of 19% overall, with less than 5% growth in the U.S. and just under 30% growth in international markets.

Netflix released a flurry of original series and movies in the fourth quarter, which could help attract new subscribers and retain old ones. The Witcher debuted in December and quickly became one of the streamer's most-popular series of 2019. Prior favorites Lost in Space and You returned for their sophomore seasons. And a number of big-budget movies also hit the platform last month, including The Irishman, Marriage StoryThe Two Popes, and Dolemite Is My Name, all of which have generated awards buzz.

History has shown that investors tend to run for the hills when this tech giant misses its own subscriber forecasts. Thanks to the wild card of the Disney+ launch, shareholders will be watching those figures even more closely. If Netflix's subscriber numbers fall short of projections in the fourth quarter, investors may just be convinced that Disney+ really is a threat, and the resulting sell-off could be severe.