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Netflix vs. Disney: Financial Face-off
Grab your popcorn! We're settling the debate between Netflix and Disney+, once and for all.
It's time to roll out the red carpet and compare the numbers of two of the biggest streaming giants, Netflix and Disney+. In today’s newsletter, we'll take a closer look at how the numbers stack up for each company, and see who comes out on top in this financial face-off. Grab your popcorn and let's dive in!
Netflix and Disney+ are two of the leading streaming platforms worldwide, offering a vast array of movies, TV shows, and original content to audiences around the world. While Netflix has been around for over a decade, Disney+ is the new kid on the block and has quickly become a force to be reckoned with. But which reigns supreme? Let’s take a look at the financials.
A brief history of streaming
Netflix was founded by Reed Hastings and Marc Randolph in 1997. Originally a mail-based DVD rental service, Netflix debuted its on-demand streaming service in 2007, and has never looked back.
Over the years, Netflix has grown its streaming library making it a major player in the entertainment industry. In addition to licensing content from other studios, Netflix has also invested heavily in original programming, producing hit shows and movies such as Stranger Things, The Crown, and Glass Onion: A Knives Out Mystery. Netflix original content has received multiple Emmy and Oscar awards, and its exclusivity to the platform helps to retain subscribers.
The Walt Disney Company was founded in 1923 by the late Walt Disney and his brother, Roy O Disney. What began as a small animation studio in Hollywood blossomed into a global entertainment conglomerate with a diverse portfolio of businesses, including theme parks, television networks, movie studios, and consumer products.
In 2019, the on-demand streaming platform Disney+ was created as a means of diversifying Disney’s income, and reducing reliance on traditional media channels which have been impacted by consumer behaviour. Despite its recent launch, Disney+ has quickly gained a massive following with its collection of classic Disney films, as well as new original shows including The Mandalorian and WandaVision.
Despite their differences in history and content offerings, both Netflix and Disney Plus have revolutionised our entertainment consumption habits, and have become major players in the ongoing streaming wars.
Before we get into the finer details, let’s take a look at some quick stats for each company.
Netflix maintained a steady subscriber count in 2022, hovering between 220-230 million subscribers. Meanwhile, Disney saw incredible growth, increasing its total subscriber base (across Disney+, Hulu and ESPN+) from 196 million to 235 million subscribers in 2022.
Net Profit in 2022
Netflix is the clear winner in terms of net profit, raking in $4.5 billion with a 14% profit margin.
Monthly Subscription Pricing
Assuming the ability to stream on up to 4 devices, Disney+ is the more affordable option at $10.99 per month compared to Netflix’s hefty $19.99 a month fee. But in reality, we’re all paying for both services (and Amazon Prime, AND Hulu. *Sigh*.)
However, Netflix does offer a larger variety of subscription plans, the most inexpensive being its ad-supported tier at $6.99 per month, with the ability to stream on only 1 device at a time. Disney also has an ad-supported tier at $7.99 per month.
The Walt Disney Company has a larger market capitalisation at $179.2 billion compared to Netflix’s $150.7 billion market cap.
Over 99% of Netflix’s revenue is from its online streaming service. Meanwhile, Disney’s income is more diversified with 66% due to its media and entertainment streams, and 34% from its parks, experiences and products.
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Let’s take a look at the subscriber counts of these two streaming platforms in more detail:
The key message here: what took Netflix over a decade was achieved by Disney+ in just 3 years. Of course, Netflix was pivotal in laying the groundwork for on-demand streaming, but those are some pretty impressive stats from Disney.
It’s also worth noting here that the dark blue line represents the total subscriber base across Disney+, Hulu and ESPN+. Disney has owned ESPN since 1996, when it acquired Capital Cities/ABC Inc., and the streaming platform ESPN+ was launched in 2018. Furthermore, Disney acquired 21st Century Fox in 2019, and along with it, a majority stake in the popular streaming platform Hulu.
Fun fact: the most popular movie on Disney+ is Turning Red (which if you haven’t seen, I highly recommend).
How do the financials compare?
Let’s take a look at the income statements for both Netflix and The Walt Disney Company in 2022.
I know what you’re thinking. People still watch DVDs??
Netflix brought in $31.6 billion in revenue in 2022, a 6% increase compared with its 2021 earnings. Despite the making $4.5 billion in net profit, this was in fact a 12% reduction in comparison to 2021, driven by higher expenses.
A notable contrast between Disney and Netflix’s income statements is the diversification of Disney’s income. As mentioned, Disney generates revenue from multiple sources such as theme parks, media networks, and merchandise sales in addition to their streaming service.
Disney’s total revenue in 2022 was 23% higher than in 2021, and its net profit of $3.1 billion was 58% higher than its 2021 performance. The main driver of this increase is the re-opening of Disney parks following the COVID-19 pandemic.
Despite these numbers, Disney’s 2022 performance actually failed to match analyst expectations, causing share prices to drop by 8% following the release of its annual report. Furthermore, Disney+ as a segment of the company is not yet profitable, with $1.5 billion in losses reported in the streaming division in 2022. Yikes.
Out with the Bob, in with the…Bob?
In November 2022, Bob Chapek’s tenure as CEO of The Walt Disney Company was terminated ‘without cause’ (read: he botched things up real bad).
Who replaced him? None other than ex-CEO Bob Iger. And Iger has already helped turn Disney back around, calling Q1 2023 a “solid quarter” for the company.
The final verdict
In conclusion, both companies have their own strengths and weaknesses. Despite showing incredible growth in its subscriber base, Bob Chapek’s $1.5 billion loss for Disney+ in 2022 has left the Walt Disney Company in a struggling position. We’re interested to see how the profitability of Disney+ changes under Bob Iger’s tenure.
Meanwhile, Netflix has reported profit year-over-year since 2003, and has a wide range of content offerings and loyal subscriber base. However, its high monthly subscription cost, reliance on a single revenue stream, and increasing competition from rival Disney+ leave future prospects for the company in the hands of subscribers themselves.
Who do you think is the winner? Share your opinion in our poll below!
My verdict: Disney+ wins solely based on the fact that it has Finding Nemo, and Finding Nemo is the greatest movie of all time.
See you on Friday with something exciting 👀
Created by Shivani
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