Streaming content pioneer Netflix's (NFLX -2.52%) stock has exploded in the last 10 years as the company kept adding tens of millions of subscribers every year. Meanwhile, Walt Disney (DIS -0.93%) has not done as well. The House of Mouse dragged its feet in getting into the streaming content industry for fears of how it would affect its lucrative legacy cable TV business.
In November 2019, Disney delayed no longer and jumped in full force with the Disney+ streaming service. The new offering is gaining traction and has some investors wondering if Disney could surpass Netflix in 2022.
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Netflix may need to give up its seat atop the streaming leaderboard
Netflix has been offering streaming content for more than a decade and has steadily amassed a total of 214 million subscribers. The growth was especially pronounced during the pandemic when hundreds of millions of folks were cooped up at home, and streaming content became a favorite pastime.
The same factor helped make Disney+ arguably one of the most successful product launches of all time. The service went from launch in November 2019 to 118 million subscribers as of Oct. 3, 2021. Comparing Disney+ and Netflix subscribers head to head leaves a considerable advantage for Netflix, but if you include Disney's other streaming services Hulu and ESPN+, it brings Disney's total to 174 million subs.
Looking at the difference that way leaves a smaller gap to overcome, 40 million to be precise.
Disney's catching up fast
While Disney has made a total commitment to its streaming services, it is still not to Netflix's degree. For example, when Netflix creates a new high-budget film, it releases it straight to its streaming service, bypassing a box-office release. That creates excitement for a steady flow of fresh new content.
Disney, in contrast, is still releasing films to the box office. The movie theaters are a lucrative source of revenue and profits for The House of Mouse that it is not ready to give up just yet. At an average revenue per user of $4.12 and 118 million subscribers, the Disney+ service brings Disney $486 million in revenue per month. Meanwhile, in 2019, before the pandemic disrupted the movie theater industry, Disney had seven titles that generated over $1 billion in box office revenue.
In addition to exclusive theatrical release windows, the other significant slowdown for new content to Disney+ has been content production. The coronavirus pandemic has made it difficult for Disney to produce as much content as it would have liked. Management expects the constraint to continue for the first part of 2022, but also that its production engine will be in full force by the end of the year.
That's when subscribers to the service can expect to see fresh new releases from all of its major franchises. Anticipation and promotion of all the new content could fuel a surge in new signups to the service. If the timing works out, it just might be enough for Disney to surpass Netflix before the end of 2022.
