Disney+ Projected to Expand Asia Subscriber Lead Over Netflix

Walt Disney CEO Bob Chapek at the company’s investor day 2020

Walt Disney CEO Bob Chapek at the company’s investor day 2020

Netflix is expected to maintain a significant edge in terms of revenue, however, since Disney+ gets most of its subscribers from India and still hasn't launched in such key markets as South Korea and Taiwan.

Disney+ will dramatically expand its subscriber edge over Netflix in the Asia-Pacific region in 2021, according to a report released Wednesday by research consultancy Media Partners Asia.

Meaningful comparisons between the two streaming services in the region are somewhat difficult to draw, however, due to differences in pricing and the markets where each company is strongest.

Disney+ is projected to finish the year with 66 million paying subscribers in Asia, more than double the 32 million subs it had at the end of 2020. Netflix, meanwhile, will see subscribers climb from 25.5 million to 33.3 million over the same period, according MPA's research.

But Netflix will continue to generate much more revenue than Disney+ in the region. MPA sees Netflix growing revenue from $2.4 billion last year to $3.3 billion in 2021, while Disney's revenue will more than double from $500 million to $1.2 billion.

The disparity stems from the fact that Disney+ is expected to finish the year with 76 percent of its Asia subscribers located in India, where subscriptions fees are priced very low, while Netflix will maintain its strongest position — 39 percent of estimated subs — in the developed markets of Japan and South Korea. Disney+ has yet to even launch in several of the more developed Asian markets where Netflix generates significant revenue, though, including South Korea, Taiwan and Hong Kong.

Overall, the report shows Netflix building upon a strong legacy position in APAC with slowing but steady growth, as Disney+ continues the impressive rapid subscriber acquisition that has continually impressed analysts since the service debuted in North America in November 2019.

“Originally, we never saw Disney+ and Netflix as directly competitive, because outside of India we always believed the total addressable market for Disney was narrower due to its family focus," explains Vivek Couto, MPA's CEO. "But that total addressable market is now growing and they will inevitably bump into Netflix as they invest in premium Asian content and scale U.S. originals output."

"All that being said," Couto adds, "outside India, Netflix is significantly ahead of Disney and other subscription video platforms in terms of daily consumption."

Neither Netflix nor Disney are active in China, Asia's largest VOD market by far, due to the Beijing government's de facto ban on direct foreign streaming channels.

The MPA report projects that Japan will surpass Australia and New Zealand to become Netflix's largest revenue-generating market in APAC in 2021, thanks to some price increases. But the Oceanic countries still are seen as making up 23 percent of Netflix's APAC subscribers and 29 percent of revenues at year end. Netflix's growth in the region will be lead by its strong investments in local originals and acquisitions in India, South Korea and Japan, as well as expanding telecom partnerships and distribution agreements in North Asia, with partners such as KDDI in Japan and KT and LG Uplus in South Korea.

"Netflix's offering continues to broaden in depth and appeal in Japan and South Korea," Couto says. Lead by strong spending in Japan, Korea and India, Netflix's total yearly content investments in Asia will grow past $1 billion in 2021, MPA estimates.

For Disney+, MPA projects Southeast Asia to trail India as the second-largest contributor of subscriptions in the region with 8.58 million subs, or 13 percent of the regional total. So far, the only Southeast Asian territories where Disney+ has launched are Singapore (since February 2021) and Indonesia (September 2020), but Malaysia, Thailand and the Philippines are expected to switch on this year. Major drivers of growth for Disney+ in APAC throughout 2021 will be the strong local originals and cricket offerings in India — where the sport is carried under the Hotstar brand — service launches in South Korea — and, potentially ,Taiwan and Hong Kong — and the debut of Star alongside Disney+ in New Zealand and Australia, which will allow price increases.

"Growth beyond 2021 for Disney will be highly dependent on key sports rights renewals in India and the growth trajectory for Disney+ in the other markets of the region," Couto adds.