To The Moon

Walt Disney ( $Walt Disney(DIS)$) has seen aggressive growth in its Disney Plus subscribers and mounting a strong challenge to streaming leader Netflix ( $Netflix(NFLX)$). The number of Disney+ subscribers reached a new high of 152.1 million in the third quarter of 2022. In terms of combined direct-to-consumer subscribers, Disney+, Hulu and ESPN+ added up amounted to around 221.1 million, and surpassed Netflix in terms of subscribers.

Number of Disney Plus subscribers from Q1 2020 to Q3 2022

On the other side of things, Netflix has seen adecline in number of paid subscribers worldwide in the last 2 quarters. From a peak of 221.84 million in Q4 of 2021, it has now dipped to 220.67 million in Q2 2022.

Netflix subscribers from Q1 2013 to Q2 2022

Disney+ has been creating content to capture Asia

Disney+ has been playing catch up and producing more K-wave content to get more to sign up in Asia. Just recently launched this month is The Zone, a reality-style survival game starting Korean National MC Yoo Jae Suk, alongside Lee Kwangsoo who left Running Man in 2021 and Girls Generation member Yuri. Disney+ also has classics like Star Wars and even the full 33 seasons of The Simpsons! In Singapore, the price of a month of Disney+ costs S$11.98, while a basic plan of Netflix costs S$12.98, standard S$17.48 and premium S$21.98. Different tiers unlock more concurrent viewing screens, premium allows 4 concurrent viewing screens which you can share with family (and friends), while premium has Ultra HD quality and standard only HD quality.

How their charts line up

Netflix daily chart

Netlfix is down around 60% year-to-date, butsince it reported earnings on July 19, it has regained around 15%. Short term resistance sitsaround $250, and there is a gap left behind inApril from $245 to $330. Gaps represents inefficiencies in the stock, they may not necessarily need to be filled.

Walt Disney daily chart

Walt Disney has fallen by around 26.5% year-to-date, but is up by around 27% since its Low on July 14 at $90.23 per share. Current support sits at $112, while resistance at $129 looks likely to be where sellers will take profits. 

Final verdict?

In terms of Netflix as a business, it is a high capex business where the company has to spend lots of money producing a drama series that may or may not turn out to be a hit like Squid Game or Stranger Things. It's positive for investors that Netflix is looking towards creating revenue from advertising on their platform, but that might cannibalise their average revenue per user as their current subscribers downgrade their plans to an ad-supported tier.

As for Disney, their direct-to-consumer is stillloss making, while their parks & experiences segment is very profitable with a gross margin of 29.5% as of their last reported quarter. Their media and entertainment segment which includes linear networks and direct-to-consumerhas only a gross margin of 9.7% as of the lastreported quarter. There has been recent rumours of investors urging Disney to spin off its ESPN linear network, where traditionally a sports network like ESPN has to pay a lot of exclusive licensing fees to broadcast a specific sport or league.

On the overall, I believe that there is more potential in the future growth of Disney than Netflix. 

@TigerStars @CaptainTiger