2 Reasons Disney+ Doesn't Pose a Major Threat to Netflix...Yet
Netflix (NASDAQ: NFLX) is facing some serious competition now that Walt Disney (NYSE: DIS) has released its streaming platform, Disney+. Not only is Disney going to be pulling content from Netflix, shrinking Netflix's library, but the new service already has strong numbers out of the gate, with more than 10 million subscribers signing up on Day One.
There's certainly reason for Netflix to be concerned given that growth in the U.S. market has been a challenge of late, and another major competitor entering the fray isn't going to make things any easier. However, Disney+'s strong start and strong potential might not be enough to lure subscribers away from Netflix, or at least not for a while.
There is plenty of good content on Disney+ for consumers to choose from. However, a lot of that comes in the way of movies that have been out for years -- in the case of its classics, decades. Netflix has been able to continually draw in users with fresh new offerings. Netflix has invested a lot in keeping current, which is a key reason its gross margin over the past 12 months has been a modest 36%, with only 7.5% of revenue making it all the way down to its bottom line. By comparison, Disney's gross margin has averaged 41%, while net income has been a solid 19% of sales.
Source Fool.com
