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Disney Plus Is Not Hampering Netflix Yet, Analysts Say — But It’s Only Been a Week

Verizon one-year-free promo providing only a 'modest' lift to Disney Plus, Credit Suisse finds

One week after the launch of Disney Plus, Wall Street analysts are scouring tea leaves for signs of how the Mouse House’s streaming service is faring — and whether it’s taken a bite out of Netflix.

Disney Plus’ launch in the first week had “little to no impact” on Netflix usage trends, which is “reassuring for Netflix relative to the competitive concerns priced into its stock, in our view,” Credit Suisse analysts said in a Nov. 18 report.

The analysts, led by Doug Mitchelson, cited analysis of Sensor Tower app downloads and Google search data. Disney Plus notched 4 million app downloads on the launch day, tapering down to about 1.5 million per day over the Nov. 16-17 weekend, according to Sensor Tower. At the same time, downloads of Netflix’s app were unaffected, with the subscription VOD leader continuing to average over 70,000 downloads per day, consistent with trends for the year. “In the extremely short term, Netflix app downloads appear unaffected by the Disney+ launch,” the analysts wrote.

Indeed, first-time installs of the Netflix mobile app in the U.S. were up 7% during the first week of Disney Plus availability, compared with average installs for the four weeks leading up to its launch, according to Sensor Tower.

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But it’s been only one week into Disney Plus — and the initial findings obviously don’t indicate what the long-term subscriber trends for Netflix or any other streaming service will be in the year ahead.

As the Credit Suisse analysts themselves noted, “global streaming competition is a marathon rather than a sprint, and it’s too early to consider the results of these limited data sets to be conclusive.”

While not offering a take on Disney Plus’ effect on Netflix, Morgan Stanley’s Ben Swinburne wrote in a note Monday Netflix users spend some two hours per day on average with the service, which is “a fundamentally differentiated position with consumers than any of the recent streaming launches.” The analyst added, “we maintain the view that there will be a very short list of truly global, truly [direct-to-consumer] streaming services that can earn attractive returns long-term — and our current view is [Netflix] and [Disney] will be two of those.”

Disney announced, a day after the Nov. 12 debut in the U.S., Canada and the Netherlands, that it had racked up over 10 million users over the past several months. But it didn’t say how many were on free trials or had taken Verizon’s free 12-month offer of Disney Plus for customers on unlimited wireless plans.

Verizon has an estimated 17 million customers on unlimited plans, and a key question is how many of those were included in the initial 10 million figure Disney announced.

Overall, Verizon’s promotional impact has been “modest,” according to Credit Suisse’s analysts, based on a survey of 59 of the telco’s retail stores across the top U.S. 25 markets. Just 15% of Verizon’s customer-service reps said the promotion drove increased retail traffic and 19% indicated it drove customers to switch carriers. Meanwhile, 34% of the customer-service reps polled by Credit Suisse said they believed the free Disney Plus offer drove customers to upgrade to unlimited service.

Again, it’s still early in the game for Disney Plus. On Nov. 19, the service launched in Australia and New Zealand (with an addressable market of 9 million broadband homes, according to Credit Suisse). And in March 2020, Disney plans to launch Disney Plus in Western European countries, including the U.K., France, Germany, Italy and Spain, making it available to another 118 million homes, per Credit Suisse estimates.

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