May 30, 2019

Disney or Die? What the Future Holds for Netflix

We all love Disney, right? From family favourites like Frozen and Toy Story to blockbuster movies like Avengers and Star Wars – where would entertainment be without it?

That’s the question Netflix is asking itself as Disney prepares to withdraw all of its content from the streaming platform. In November, Disney+ will launch in the US and will become the exclusive home of Disney content – only accessible through a $6.99 monthly subscription.

Industry commentators think it could be the death knell for Netflix. “Disney’s ownership of iconic franchises like Star Wars gives it something no money can buy. Meanwhile, Netflix will lose a lot of its best content—and potentially millions of subscribers who switch to Disney+,” writes investor Stephen McBride in Forbes.

But what do consumer think? Will they really go elsewhere if they can’t watch Finding Nemo and Captain America? We decided to find out by asking 500 people in the UK and the US how they’re feeling about everything.

Market dominance

Out of the 250 people we surveyed in each country, 73% were Netflix users in the US and 88% were users in the UK, demonstrating just how popular the platform currently is. Not only are lots of people using Netflix – they’re using it a lot. Just over 40% of US Netflix users use it every day, and the same is true of 43% of UK users.

The media foresees the cost of a Netflix subscription being a major factor in why people will defect to Disney. In January, the platform increased its prices for US customers, hiking its Basic plan, which offers a single non-HD stream subscription, from $7.99 to $8.99 per month and its Standard plan (two HD streams) from $10.99 to $12.99 per month. In the UK, those plans are priced at £5.99 and £7.99 respectively.

Despite the price hike in the US, 85% of users there still believe a Netflix subscription offers good value for money. In the UK, that figure tops 90%. That said, perhaps it won’t look like such good value once Disney content is no longer available?

Big brand love

The good news for Netflix is that its users really like it. We asked them to rate on a scale of 1-10 how likely they would be to recommend the streaming service to a friend. Netflix achieves a Net Promoter Score (NPS) of 58 in the US and 52 in the UK (the score can be between -100 and 100, and anything above 0 is regarded as good). According to NPS Benchmarks, Netflix scores significantly higher than its competitors Hulu, HBO Now and Amazon Prime Video.

When users told us in their own words what they like about Netflix, lots of people mentioned the variety or range of content (30%). “It has so many movies and shows and they’re always adding news ones,” said one user. “There’s usually always something to watch that’s bingeworthy,” said another. People also mentioned enjoying Netflix’s original content. “The original programmes are just getting better and better,” said one UK user.

A significant percentage of users state they actually watch more original content than movies and shows produced by other studios – 21% US and 35% UK. Meanwhile, 22.5% of American users and 18% of British users watch mainly non-Netflix produced content (the rest watch an even mix of both). It’s an encouraging sign for Netflix – its original programming has become an important part of the offer for most users.

When asked what they don’t like about Netflix, the most common remarks related to the cost of the service (12%), particularly in the US where the subscriptions have increased. Having to pay more for premium benefits like multiple screens was also a grumble. “I dislike that I’m limited to the number of devices I can use my account on without paying more money,” said one user. But at 12% of respondents, it’s far from a majority.

Dedication to Disney

So we’ve established that users are, for the most part, very happy with Netflix, but here’s where we throw a spanner in the works. We tested how important Disney content is to those people that are satisfied Netflix customers right now.

Of all the Disney content currently available on Netflix, the most prized by users is Marvel – 60% of respondents in the US and 53% in the UK say it’s important to them. Around half of users in each country also highly value Disney and Pixar animations. Surprisingly Star Wars is only important to 31% of American users and 35% of Brits – not as much as analysts predicted.

Despite the high level of importance users place on some Disney content, the vast majority say they won’t defect from Netflix if they can no longer access it on the service. In the US, only 6% say they’re not at all likely to carry on using Netflix, while that figure is less than 1% in the UK. A further 13% in the US and 6% in the UK, say they are not particularly likely to continue their subscriptions, but the balance remains very much in Netflix’s favour.

Of those who are likely to continue using Netflix, 27% in the US say they will also subscribe to Disney+ and 36% in the UK say the same. A further 39% and 31% respectively say they might sign up. Of those who believe they will stop using Netflix, 26% (US) and 40% (UK) will move to Disney+, while 43% (US) and 47% (UK) might.

What can Netflix do to make these users stick around? The number one thing, according to 58% of American users and 73% of British users is offering more new release movies. A further 50% of US users that are planning to leave Netflix could be persuaded to stay with a cheaper subscription, while the same is true of 53% of UK users. Also worth noting, 40% of UK users who would leave said better original programming could change their minds.

Judging by these results, it looks like Disney+ won’t steal that much market share from Netflix right away, but with such a wealth of family content, will it attract a different audience altogether? Of those respondents who are not currently using Netflix, 37% in the US say they either will or might sign up, while 50% in the UK say the same, showing the service could help introduce some new consumers to streaming.

A final thought

Where analysts may be getting this wrong is viewing it as a case of one or the other. It doesn’t have to be either Netflix or Disney+. As this research shows, it could well be both. If the competing streaming platforms can stay competitive on price there’s every chance consumers will stretch to two monthly subscriptions. Meanwhile, Netflix needs to focus on the original content that is both winning over fans and reducing its dependence on external producers.

Got a competitor nipping at your heels? Ask Attest to find out how big a risk they really are.

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