Disney Has a Monster Advantage Over Netflix in the Streaming Wars. Here's Why
The streaming wars have intensified over the past couple of months as more companies enter the fray with a limited number of target customers. Huge new membership numbers during the early stages of the pandemic have made it more challenging to add more on top of that, and each company is pouring money into content and distribution in the race to the top.
The two leaders right now are Netflix (NASDAQ: NFLX), which has dominated the industry for years and boasts more than 220 million subscriptions, and Disney (NYSE: DIS), which has grown its paid customer base to more than 205 million over the past three years. As both companies up their game, there's a major advantage that Disney has over Netflix, and investors shouldn't overlook this.
Netflix is facing a lot of pressure due to investing in content, and those costs have to be covered by subscriptions. Investors may not realize that for years, Netflix was able to record profits even though it was cash-flow negative due to amortization . In other words, subscription fees alone were not able to cover the costs of content production. You can't make those expenses disappear, which is why they showed up as cash outflows.
Source Fool.com
