"Wall Street should be worried about Netflix, as YouTube has become an industry giant. The Alphabet Inc. ( NASDAQ: GOOGL) division just pressured Walt Disney Co. ( NYSE: DIS) for a better deal to have its streaming channels available on YouTube. The standoff did not last long. Industry experts said Disney had to agree to YouTube's terms, for the most part."
"One reason Wall Street loves Netflix is its size and low churn rates. Churn is costly. To grow, a streaming service has to replace the people who left and add new ones. Netflix's churn rate is below 2% per quarter, the lowest in the industry. Netflix is still growing fast. In the most recent quarter, revenue was up 17% to $11.5 billion."
"Netflix also has a lineup of its own films and TV shows, and some have done very well. Top shows include The Crown, Our Planet, The Last Dance, House of Cards, and Stranger Things. The shows are considered "sticky." Most services have hundreds of movies and TV shows, but many are from other producers. That creates a differentiation problem. Original series, like those on Netflix, go a long way to temper the originality challenge."
Netflix shares are up 31% year-to-date while the S&P 500 is 13% higher. YouTube has become a major streaming competitor, surpassing Netflix in U.S. streaming market share and generating over $10 billion in recent-quarter revenue. YouTube pressured Disney for carriage terms, and Disney largely agreed. Disney's Disney+ and Hulu reached nearly 200 million combined subscriptions. Netflix benefits from scale and a quarterly churn rate below 2%, the lowest in the industry. Recent quarter revenue rose 17% to $11.5 billion and earnings increased to $5.87 per share with further growth forecast. Original series drive differentiation, and Netflix is expanding its ad-supported business.
Read at 24/7 Wall St.
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