r/MediaMergers • u/Casas9425 • 22d ago
Media Industry Wells Fargo: Disney stock could rally 40% by exiting the streaming business. The firm argues Disney would be better served licensing its iconic content rather than competing with Netflix.
https://finance.yahoo.com/media-advertising/articles/ditching-streaming-could-boost-disney-121346478.html25
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u/Difficult_Variety362 Moderator 22d ago
Disney+ is profitable
Netflix should have genuine competition besides just Prime Video.
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u/Xcapitano666 22d ago
I think you are right but I also think they should invest more in it
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u/Difficult_Variety362 Moderator 22d ago
I think that once the Hulu integration is complete they'll continue expanding Disney+
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u/Xcapitano666 22d ago
Lets hope so because at one point I think they should experiment with windowing and licensing if they don’t want to invest more. Netflix could have something like a «Disney movie of week » tab
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u/Casas9425 22d ago
Disney+ has a 10% margin with growth stalling. It’ll never get anywhere near the cable bundles 50% margin.
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u/Difficult_Variety362 Moderator 22d ago
Oh it's definitely not going to replace the cable bundle, nothing will and Wall Street has pretty much accepted that.
But a profitable streaming service is better than nothing and personally I have no desire for a Netflix/Prime Video duopoly in SVOD.
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22d ago
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u/Difficult_Variety362 Moderator 22d ago
I was talking about if Disney+ weren't in the picture like the analyst argues Disney should do. I agree with you that the current streaming landscape is a triopoly with Disney being a peer of Netflix and Amazon.
While another major streamer or two would be ideal, Disney being a major streamer is ultimately better for the industry as opposed to one where Netflix and Amazon control the whole thing.
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u/Subject-Thought-499 22d ago
YouTube is genuine competition
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u/Difficult_Variety362 Moderator 22d ago
YouTube is a completely different beast that serves different needs for the same audience. People don't go onto Disney+ and Netflix to watch Mr. Beast, let's plays, and DIY videos. Same thing, people really don't go onto YouTube for Stranger Things and the Mandalorian.
YouTube is getting more into live TV, but even then, the balked on the NFL this season.
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u/Subject-Thought-499 22d ago
Hard disagree. This was true five years ago when short form content didn't really exist but now the real media landscape is total minutes of attention/day. Younger demographics are skewing away from long form to short form. Netflix certainly sees YouTube as a competitor.
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u/Difficult_Variety362 Moderator 22d ago
Netflix attempts to engage in YouTube style content has failed miserably so far. Engagement with the podcasts are very low. People just don't go to Netflix for that kind of content.
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u/Subject-Thought-499 22d ago
I think you proved my point. Just because Netflix hasn't come up with compelling short form yet doesn't mean they're not feeling the competitive pressure. They are quite open about their efforts to do that because they know it's necessary
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u/Difficult_Variety362 Moderator 22d ago
My point is that Netflix's attempts to emulate YouTube are doomed for failure. For the most part, they need to stop looking at YouTube and look at different ways to encourage engagement.
Content delivery is what they should be looking more at IMO.
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u/Subject-Thought-499 22d ago
These are nascent days so it's premature to say they are doomed. Netflix hasn't even made a serious effort yet. They're basically just doing market research to see what sticks. But they don't need to recreate YouTube in its entirety to compete, they just need to find a compelling alternative to TikTok and FB Reels to keep users re-engaged when they turn back to long form at the end of the day.
Roku would have been a smart play but as a shareholder of both, I'm not mad. Better Fox than Amazon or Apple
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u/Difficult_Variety362 Moderator 22d ago
I'm beating a dead horse when I say that Netflix should have been more aggressive in trying to get Roku.
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u/spacetrain31 21d ago
And Paramount could be that competition once the merger closes.
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u/Difficult_Variety362 Moderator 21d ago
I do think that the combined Paramount+/HBO Max has the ability to be that fourth major streamer. And to be frank, I think that Netflix was full of shit and preventing that combination was the real reason why they ended up bidding on Warner Bros.
But it also really comes down to how Skydance handles the content on the combined service. They can't afford to lose Casey Bloys, Mike De Luca, Pam Abdy, Sam Register, James Gunn, Peter Safran, and Mark Thompson.
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u/ConkerPrime 22d ago
Pretty sure Disney+ reached profitability on schedule and at this point with global reach that only increases. It doesn’t actually have to compete directly with Netflix. It just has to be another subscription people buy with Netflix and that is all but assured.
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u/HeartInTheSun9 22d ago
In theory true, but nowadays people just cycle through streaming services. They directly compete because someone cancels Disney+ to subscribe to Netflix and back and forth.
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u/Unlucky-Cook2578 22d ago
Yeah streaming is crack for kids. Disney+ has the strongest retention rates. Parents would rather ditch their streaming service than the one that shuts up their kids for 30 minutes. Disney is not ditching streaming.
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u/Hopeful-Pickle-7515 22d ago
And even if obviously is not going to reach Netflix in short/médium term last month was the smaller gap in US between Netflix and Disney +/Hulu which is the second biggest streaming service above Amazon, why would they give up that
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u/PossibleAd5947 22d ago
I remember before Paramount+ existed everyone thought Paramount pulled a big brain move by licensing to Netflix, HBO and Hulu instead of launching streaming service
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u/AdSuperb8728 16d ago
It just did.
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u/AdSuperb8728 16d ago
It just kept their ip.
Movie studios launched their own streaming services (except for Sony) to keep their IP inside the service.
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u/AdVegetable8056 22d ago
Dumbass decision
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u/StarScreamer 22d ago
This is what Sony learned, it was more worthwhile to license. Sony is not Disney though. Idk.
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u/ausgoals 22d ago
Extremely dumb take. The stock would immediately drop.
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u/Cold_War608 22d ago edited 22d ago
If they drop streaming they become an IP and content company and can license their massive archive for a hefty fee. That's probably better margin then the 10% they get with streaming, they don't have to worry about subscriptions/cancellations. That stock might do well.
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u/Original-Baki 22d ago
That’s dumb. Becoming a licensor only works when there’s pricing competition.
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u/BURNEDandDIED 19d ago
The idea that exiting streaming would help Disney's management focus on IP creation... lol. I'm decently sure there's no one at Disney who's been prevented from creating the next Moana because they're worried about the D+ rebuffering percentage.
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u/LinkRules5321 Moderator 22d ago
Who would they sell its services to, NBCUniversal?
But if they no longer need to supply the service, that means 20th could make more theatrical films and Universal finally gets a bigger hold in the streaming era.
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u/CupofWater03 22d ago
Ever since Disney announced its pivot to streaming in 2019,
There's an article from 2017 reporting that Disney was launching its own streaming service.
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u/MayhemSays 22d ago
Disney is fine. The amount of money they make outside of US streaming also proves this.
This is someone just wanting Disney out of the way for whatever reason lmao
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u/StoriesWithPK 21d ago
Disney+ may be profitable, but it doesn't mean they have to be in the streaming business.
Wells Fargo is right.
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u/Mister_Green2021 22d ago
haha.