Welcome to the latest episode of the Full-Court Finance podcast from Zacks Investment Research where Associate Stock Strategist Ben Rains dives into Netflix’s (NFLX - Free Report) recent Q2 earnings report that sent its shares tumbling. The episode then transitions into a look at the larger streaming TV industry, where we see why Amazon (AMZN - Free Report) and Disney (DIS - Free Report) could be real challengers to Netflix’s dominance.
Netflix added 2.7 million paid memberships during the second quarter, which fell far below its own 5 million forecast and Wall Street’s 5.5 million estimate. More specifically, the Los Gatos, California-based firm noted that it had roughly 130,000 fewer U.S. subscribers at the end of Q2 than it did in the first quarter. This marked the streaming firm’s first quarter-to-quarter subscriber decline in the U.S. since 2011.
The company still expects to add millions of more users going forward and it is currently the largest streaming TV firm in the world. But Netflix recently lost two of its most valuable shows, The Office and Friends, which are headed out the door to help bolster soon-to-be Netflix rivals. Over the next year, NBC Universal (CMCSA - Free Report) , AT&T (T - Free Report) , and others are set to roll out their own streaming TV offerings.
Meanwhile, in a world where Roku (ROKU - Free Report) is one of the only other pure play streaming TV stocks at the moment, Disney and Amazon might stand the best chance of dethroning Netflix as the streaming champion in the long run. Amazon Prime Video already boasts an array of TV shows and movies, some of which have earned critical acclaim. The e-commerce giant also offers consumers two things they won’t find on Netflix: live sports, as well as shipping and retail shopping deals.
Disney, which now controls Hulu and owns ESPN, is also a potential streaming juggernaut that has the ability to grab customers with some of the biggest brands in entertainment. ESPN+ has already proven relatively successful and Disney+ could easily attract tons of customers when it launches in November.
The likes of Apple (AAPL - Free Report) , Facebook (FB - Free Report) , and YouTube (GOOGL - Free Report) are also prepared to play their part in the streaming entertainment age. But two companies might stand the best chance of competing alongside Netflix for years to come.
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