You will be redirected back to your article in seconds

Netflix Stock Drops After CEO Acknowledges ‘Tough Competition’ Coming From Disney, Apple

Netflix shares fell as much as 7% Friday to a nine-month low, coming after CEO Reed Hastings commented that the November launches of Disney Plus and Apple TV Plus will introduce a “whole new world” of competition.

Hastings, speaking at the Royal Television Society conference Friday in Cambridge, England, said, “While we’ve been competing with many people in the last decade, it’s a whole new world starting in November… between Apple launching and Disney launching, and of course Amazon’s ramping up.”

The Netflix chief also cited NBCUniversal’s Peacock streaming service, slated to debut in April 2020. “It’ll be tough competition,” Hastings said. “Direct-to-consumer [customers] will have a lot of choice.”

Hastings also said new SVOD players would cause production costs to increase even more. “Someday ‘The Crown’ will look like a bargain,” he said, referencing the British royals series with a reported budget of over $100 million per season.

Netflix stock closed down 5.5% for the day, to $270.75 per share.

Hastings’ comments apparently unnerved investors, even though Netflix has previously said forthcoming subscription VOD services from Disney, Apple, WarnerMedia and NBCU would step up competitive intensity in the sector.

“The competition for winning consumers’ relaxation time is fierce for all companies and great for consumers,” the company told investors in July in its Q2 earnings letter. At the same time, the company said in the U.S., customers spend only about 10% of their TV-viewing time on Netflix “and less of their mobile screen time, so we have much room for growth.”

Netflix’s stock drop also comes after Bernstein media analyst Todd Juenger on Thursday published a note saying the streamer’s shares could drop 20% based on investor perceptions that Disney Plus and Apple TV Plus — priced well under Netflix’s standard $12.99 monthly two-stream plan but with considerably less content — would steal share. But he predicted Netflix’s stock would rebound, setting a $450-per-share 12-month price target.

“We do not believe the launch of additional SVOD services will cause existing Netflix subs to cancel, or future Netflix subs to not materialize,” Juenger wrote, reiterating an “outperform” rating on the stock. He argued that the expectation new entrants will take market share from Netflix rests on an unfounded assumption that the services will compete with each other “for a fixed number of potential subscribers.”

Apple TV Plus is scheduled to launch Nov. 1 in over 100 countries and regions, priced at $4.99 per month — and free for 12 months with the purchase of a new Apple device. Apple is premiering nine original shows on Apple TV Plus when the service launches, including “The Morning Show,” a drama starring and executive produced by Reese Witherspoon and Jennifer Aniston, and starring Steve Carell.

Then on Nov. 12, Disney Plus — which will cost $6.99 per month in the U.S. — is set to debut in the States, Canada and the Netherlands, marking the first time movies and shows from Disney, Pixar, Marvel, Star Wars, and National Geographic will be together in one streaming service, along with a slate of originals. Disney also has unwound it licensing deal with Netflix for the U.S. and Canada, starting with new film releases in 2019.

In the first year of launch, Disney Plus will include 7,500 episodes of current and past TV shows and 500 movies, according to Disney. Also in Year One, it’s set to debut more than 25 original shows, including Jon Favreau’s live-action Star Wars series “The Mandalorian,” and 10 original films and documentaries.

Even before the new SVOD services launch, Netflix’s stock was battered after it badly undershot subscriber forecasts for the second quarter of 2019, posting its first net U.S. customer decline since 2011 while growth slowed considerably overseas. The company added 2.7 million subs worldwide, almost half as many as the 5 million it had projected.

Netflix is scheduled to report Q3 2019 earnings on Oct. 16 after market close.

More Biz

  • Harvey Weinstein

    Harvey Weinstein, Who Entered Court on Walker, Gets Bail Hiked to $5 Million

    A judge on Wednesday increased Harvey Weinstein’s bail to $5 million, following repeated violations of his ankle monitor system. Justice James Burke agreed to the prosecution’s request to hike his bail, which had been set at $1 million. The defense claimed that the lapses in monitoring were due to technical glitches. Prosecutor Joan Illuzzi alleged [...]

  • Time Person of the Year Greta

    Greta Thunberg Named Time Magazine's Person of the Year

    Time magazine has named Greta Thunberg, the 16-year-old Swedish climate change activist, as its 2019 Person of the Year. Thunberg, the youngest recipient of the annual honor, was selected from a shortlist that included Donald Trump, Nancy Pelosi, the Trump impeachment whistleblower and pro-democracy protesters in Hong Kong. Thunberg gained national attention for skipping school [...]

  • Hipgnosis Acquires Catalog From Jeff Bhasker

    Hipgnosis Acquires Catalog From Bruno Mars-Harry Styles Collaborator Jeff Bhasker

    Hipgnosis Songs Fund has acquired a music catalog from five-time Grammy-winning producer, songwriter and musician Jeff Bhasker. Terms of the deal were not announced, but Bhasker has worked extensively with such artists as Mark Ronson and Bruno Mars (on “Uptown Funk” and Mars’ “Unorthodox Jukebox” album), Kanye West (“808s & Heartbreak” and “My Beautiful Dark Twisted [...]

  • Kasi LemmonsNew York Women in Film

    Kasi Lemmons, Jane Rosenthal, Ann Dowd Talk Golden Globes Female Director Snub

    The absence of women among director nominees for the Golden Globes is another example of how much work remains to be done to achieve gender parity in the entertainment industry, honorees said Tuesday night at the 40th annual Muse Awards presented by New York Women in Film and Television. “Harriet” director Kasi Lemmons, “The Irishman” [...]

  • Juice WRLD - Jarad HigginsWireless Festival,

    Juice Wrld Streams Climb Nearly 500% After His Death

    As often happens after an unexpected death, Juice Wrld’s music soared in popularity after his passing on Sunday, with streams climbing nearly 500% on that day alone. On-demand audio streams for the rapper, who died at the age of 21 after suffering a seizure at Chicago’s Midway Airport, climbed 487% on Sunday to more than [...]

  • Netflix headquarters in Los Gatos, California,

    Netflix Ordered to Stop Poaching Fox Employees

    A court on Tuesday issued an injunction barring Netflix from poaching employees from Fox and confirming the validity of fixed-term employment agreements. The ruling marks a hard-fought victory for Fox — now owned by Disney — which set out three years ago to stop Netflix from raiding its employees. Netflix had sought to invalidate Fox’s [...]

  • Harry Styles performs at the Greek

    First Look at Harry Styles' Ticket-Giveaway Bus (EXCLUSIVE)

    Harry Styles announced Tuesday he is partnering with American Express to give away tickets to his concert at the Forum in Los Angeles on Friday — on a special custom bus. At the show, “Harry Styles Fine Line Live: One Night Only!,” the singer is expected to perform his entire new album, which is also [...]

More From Our Brands

Access exclusive content