Wall Street Firm: Apple TV+ Will Have Little Impact on Netflix

Apple is set to launch its $4.99 branded Apple TV+ streaming video service on Nov. 1 — less than half the price of Netflix. The media giant is also spending $6 billion on original content.

Wall Street’s Bank of America Merrill Lynch says Netflix has nothing to worry about. The investment bank says Netflix has significant advantages over Apple TV+ when moving past the media hype.

“We don’t see Apple TV+ in its current form as likely to disrupt Netflix’s positioning as the subscription video-on-demand staple for consumers,” analyst Nat Schindler wrote in a note.

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Specifically, the investment firm contends Apple TV+’s nine original titles streaming at launch are dwarfed by more than 400 original series available on Netflix.

The SVOD pioneer also has nearly 4,000 movies and 1,800+ episodic series available.

“We see Apple TV+ as likely to be hit-driven in the near term, with subscribers turning it on and off based on whether a series gains mainstream appeal,” Schindler wrote. “Apple’s content library gains scale to compare to Netflix or Amazon, it is likely as a nice-to-have for Apple device users/buyers and no substitute for Netflix’s large catalog of licensed content and originals.”

Netflix Stock Up as App Downloads Surge

Shares of Netflix are up 3% Sept. 9 in midday trading following a Wall Street report outlining a surge in downloads of the SVOD behemoth’s app.

Apps are indicative of video streaming outside the traditional in-home television on portable devices such as cell phones, tablets and laptops.

Data from Bank of America Merrill Lynch found that app downloads in the current third quarter (ending Sept. 30) are up 18% from the previous-year period and 30% from Q2 (ended June 30).

Domestic app growth is up 6% year-over-year and 13% from Q2, while Netflix’s global app downloads are up 21% from last year and 34% from Q2.

Bank of America Merrill Lynch attributed the third season bow of original series “Stranger Things” in June for the stock bump.

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New GameStop CEO Promises Change; Wall Street isn’t Buying: Stock Down 38%

New GameStop CEO George Sherman, in his first earnings call on June 4, pledged to shake up the status quo in an effort to transform the world’s largest video game retailer in the digital age.

Wall Street beat him to the punch after GameStop reported a 75% drop in quarterly income — driven in part by a 35% drop in console sales. Revenue fell 13.3% to $1.54 billion.

Company shares are down a record 38% in midday June 5 trading, with more than six times the typical daily volume of shares traded in just four hours.

GameStop CEO George Sherman

“We struggle with how much GME will able to monetize new ‘experiential’ and subscription initiatives such as eSports and revamping the PowerUp rewards program,” Bank of America Merrill Lynch wrote in a June 5 note.

Sherman said the “GameStop reboot” must “transform” the retailer to remain a viable player in a changing industry underscored by subscription streaming and digital access.

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He said the retailer would focus on the “20% of our SKUs that drive 80% of our business.” Notable among those performing SKUs: Collectables. The segment saw sales increase 10.5% to $157.3 million, with continued growth of trend items in both domestic and international stores.

“We’ll continue to get better at that piece of the business through inventory optimization and expand the assortment of exclusive products that our customers desire,” Sherman said.

At the same time, GameStop is divesting interest in Simply Mac, with a sale of the unit expected in the second quarter and melding the ThinkGeek.com business within the company’s branded “omni-channel” experience.

Sherman is looking to generate a $100 million operation income improvement while cutting debt more than $350 million. He also wants to better leverage the company’s 60 million PowerUp Rewards members.

“We’re evaluating new revenue streams and how we can and should participate in the digital economy, particularly given the significant number of loyal customers we bring the publishers and console makers,” Sherman said. “This will take time but is a necessity to enable us to continue maintaining our position as the leader in the video game space.”

Michael Pachter, media analyst at Wedbush Securities in Los Angeles, says that despite ongoing consumer shifts away from packaged media, majority demand still exists.

“We don’t expect the next console cycle to eliminate physical discs altogether,” Pachter wrote in a note. “Consumers still value physical games for their portability, ease of gift giving and the ability to trade them in for value at GameStop. Notwithstanding dire pronouncements about the imminent demise of physical media, our covered game publishers still sell over 50% of their console games in physical form.”