Disney+, Apple TV+ Are No Netflix Killers, Says Analyst

MoffettNathanson's Michael Nathanson sees the newly launched streamers as complementary, not replacements.

Disney+ and Apple TV+ will complement and not doom Netflix in a fast-expanding streaming TV space, MoffettNathanson analyst Michael Nathanson said Friday.

His Jan. 17 research note argued Netflix won't be replaced by Disney and Apple's new streamers, at least early on, and should successfully beat back their competitive threat over time.

"The data clearly shows that the 4Q 2019 launches of both Disney+ and Apple TV+ DID NOT immediately inflict significant damage to the streaming market structure. Rather than serving as substitutes, perhaps multiple major SVOD services will serve as complements and augment the penetration of streaming as a whole," the MoffettNathanson analyst wrote.

The run-up to Disney+ and Apple TV+ launching was preceded by Wall Street forecasts that U.S. consumers would drop Netflix to view content like The Mandalorian and Star Wars movies on Disney+ and pricey original series The Morning Show on Apple TV+. "What we don’t expect is for a wave of Netflix customers to cancel on day one because Apple TV+ has seven dramas or Disney has one great original and is available for a low monthly price of $6.99," Nathanson argued.

His comments echo other Wall Street watchers who forecast that, despite Apple TV+ and Disney+ launching and other streaming players getting set to compete, Netflix will not greatly bleed subscribers.

"We continue to believe the 'streaming wars' narrative is false and there will be multiple winners in global streaming and thus continue to recommend buying Netflix (NFLX), Amazon (AMZN) and Discovery (DIS) together," BMO Capital Markets entertainment analyst Daniel Salmon argued in a Jan. 15 research note ahead of Netflix releasing its latest financial results on Jan. 21.

If anything, Nathanson says Disney+ and Apple TV+ will need to aggressively compete on content and talent to keep pace with Netflix, especially given both can be had initially as part of free-year promotional offerings.

"Time will tell if customers stay with these services after the free-year offer, but these numbers start to signal that promotions are effective in bringing in a larger customer base immediately after launch in an already saturated marketplace. We would think that both of these new services need to quickly accelerate original spending to limit customer churn once the free promotions wear off," the analyst said.

More recent streaming arena entrants like Facebook Watch, Apple and Google-owned YouTube are also ramping up investment in originals even as Netflix faces new competition in the form of WarnerMedia's HBO Max and Comcast's Peacock.