The world’s premier streaming video-services platform Netflix, Inc. (NFLX) has been facing more competition than ever in the streaming landscape; its peers are now investing significantly in the creation of original and on-demand entertainment content. Although the COVID-19 pandemic bolstered NFLX’s business initially, with a significant increase in demand for indoor entertainment, the company’s shares…
slid after its third-quarter earnings announcement. This was primarily due to its reported deceleration in its subscription growth, with 2.2 million paid net adds in the third quarter compared to 6.8 million in the prior-year quarter.
Moreover, NFLX has been facing a potential shortage of content as film and movie production has remained suspended. Also, many popular series are stalled, and new shows have been cancelled. These factors will likely hurt the company’s subscriber growth in the upcoming months we think.
Industry competition is likely only going to grow more intense, potentially ushering in a ‘streaming war’ as traditional and emerging media companies, such as Walt Disney Company (DIS – Get Rating), Roku, Inc. (ROKU – Get Rating) and fuboTV, Inc. (FUBO – Get Rating) continue to gain momentum in the streaming space. With newer and more diverse show lineups, these companies are well-positioned to surpass NFLX in the upcoming months.
Walt Disney Company (DIS – Get Rating)
Before the COVD-19 pandemic hit, DIS operated primarily in the fields of studio entertainment and theme parks. However, since the beginning of the year, as the global, economy shut down, the entertainment giant has focused on developing its streaming platform. The company launched Disney+ last November, which has proven to be a major source of revenue since.
On December 11, the company announced its plans to launch 100+ new titles per year for Disney+. DIS shared new details of regarding its international general entertainment content brand, Star, which will be launched in Europe and several other international markets in February. 2021. This product line-up is expected to significantly boost the company’s direct-to-consumer services revenue.
On October 13, DIS announced a strategic restructuring of its entertainment business, with an emphasis on curating original content for its streaming platform. Given the big success of Disney+ to date, the strategic plan could accelerate its direct-to-consumer business while its growth strategy.
DIS’s media networks’ revenue for the fourth quarter ended October 31, 2020 has increased 11% year-over-year to $7.21 billion. Direct-to-Consumer & International revenues have increased 41% from the year-ago value to $4.85 billion. Segment operating income from the media network grew 5% from the prior-year quarter to $1.86 billion, while free cash flow rose 224.4% year-over-year to $3.59 billion over this period.
The consensus EPS estimate of $2.60 for the next year indicates a 63.5% improvement year-over-year. Moreover, DIS beat the street EPS estimates in three of the trailing four quarters, which is impressive. The consensus revenue estimate of $71.05 billion for 2021 indicates a 9.6% increase year-over-year.
How does DIS stack up for the POWR Ratings?
A for Trade Grade
A for Peer Grade
B for Buy & Hold Grade
A for Overall POWR Rating.
The stock is also ranked #1 of 15 stocks in the Entertainment – Sports & Theme Parks industry.
Roku, Inc. (ROKU – Get Rating)
ROKU is a TV streaming platform that allows users to access various movies and TV shows, as well as live sports, music, and news. The company operates through two segments –Platform and Player. It offers a Roku software developer kit that enables developers to build a channel that streams their content to the TV.
On December 17, ROKU and WarnerMedia announced an agreement to launch HBO Max on the ROKU platform. This will allow ROKU to deliver an exceptional user experience to its growing consumers base.
The company recently announced the launch of…
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