Claims by The Walt Disney Company (NYSE:DIS) that it has overtaken Netflix in terms of subscriber numbers is a pivotal moment in the so-called streaming wars and the fall-out could lead to a new stage of consolidation in what is an overcrowded market.
New moves by the two streaming giants to launch cheaper advertising-funded pricing options are also certain to create surprising shockwaves in the wider broadcast and ad industries.
They could, says analyst Paolo Pecatore of PP Foresight, also be the “final nail in the coffin” of traditional broadcasters.
With 14.4mln new streaming subs added in the past quarter, this was a strong outperformance of its closest rival that lifted Disney’s total paying customers just above Netflix’s 220.7mln, after it took lost subscribers this year to around 3mln in the three months to the end of June.
Pescatore said it firmly underlines his belief that Disney is “at a different phase of growth to Netflix,” with still millions more users to acquire as it continues to expand into new market and roll out new blockbuster shows, including from its Star Wars and Marvel franchises.
Having only launched its Disney+ in 2019, it is still arguably in start-up mode when it comes to direct to consumer services for its content compared to Netflix, says Pescatore.
While North America is a heavily saturated media market, there are plentiful opportunities for Disney to put further weighting towards its streaming services, the tech, media and telecoms analyst says.
But the key is that Disney is still rolling out into new markets.
“This represents the next wave of development and key to its future growth plans. Netflix is already widely available and heavily focussed on refining the product and moving into new areas in order to diversify its revenue stream.”
It is now seems to be two-horse race, with data indicating households are cancelling TV subscriptions for unwanted services – a category that Disney+ appears to have escaped.
As this dawns on the chasing pack, the consequences could see further seismic shifts in what is still a young industry.
“Rivals are playing catchup and are unlikely to compete head on with Disney and Netflix. It will force others to consolidate as not all will survive,” says Pescatore.
“While there is a role for established media giants to replicate the traditional cable bundle into a streaming future, there are too many fragmented services. Partnerships will be key.”
Examples seem to be BT Group PLC (LSE:BT.A) spinning off its BT Sports arm into a joint venture with the newly merged Warner Bros Discovery Inc (NASDAQ:WBD), which owns Eurosport.
And where does that leave the likes of ITV PLC (LSE:ITV)?
Ultimately, the shift towards streaming has already negatively impacted broadcasters in the ‘linear TV’ space, who are heavily reliant on advertising as the main revenue source.
“This could prove to be the final nail in the coffin for these players,” says Pescatore.