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As Americans in self-quarantine increasingly venture online for content, MoffettNathanson analyst Michael Nathanson on Friday touted Netflix as the main beneficiary in Hollywood’s streaming wars over peers including Amazon Prime, YouTube, Hulu and Disney+.
“The world is trapped indoors, live sports on TV is non-existent, theaters are closed, unemployment is spiking to terrible levels, and new content is impossible to produce. Who wins? The one company with an incredibly cheap price point, a gargantuan library of new and original content to satisfy most demand and broad distribution,” Nathanson wrote of Netflix in an April 17 quarterly report on the streaming TV sector.
Nathanson points to better-than-expected paid customer growth as he predicts Netflix will add 1.75 million domestic subscribers and 8.46 million international subscribers during the first quarter of 2020.
“Overall U.S. streaming penetration accelerated significantly in 1Q tied to the self-quarantine and stay-at-home orders across the country,” the MoffettNathanson report read. Using Nielsen and HarrisX data to underline the rising use of streaming platforms, Nathanson sees Netflix retaining its dominant streaming market lead over sector rivals.
“Disney+ and Apple TV+ are still not inflicting any damage on the streaming market hegemony. Rather, they are growing the overall pie, at least in the initial phase of this COVID-19 environment,” the MN Quarterly SVOD Tracker report concluded.
Nathanson said Apple TV+ has grown “very slowly” during the quarantine era, with only 7 percent penetration by the end of the first quarter of 2020. And Disney+ has seen a slight drop in daily usage due to a “lack of fresh original content following the initial excitement around The Mandalorian.”
The veteran Wall Street analyst also pointed to “limited consumer interest in subscribing to Peacock or HBO Max.” The streaming tracking report, which includes a consumer survey by HarrisX, makes unwelcome reading for traditional pay TV providers.
“When asked why they stream as a replacement for pay TV, around half of streamers across Netflix, Prime Video, Hulu and Disney+ said it was due to the cost of subscription TV, which they deemed either too expensive or simply not worth the expense,” the report said.
The analyst added of Netflix, “we expect investors to continue to push the stock price higher at least until the coronavirus shutdowns reach an end. How many companies are seeing earnings estimates move higher at this unique point of time? Very few aside from Netflix, Amazon and Clorox!”
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