Analysts Keep Piling on Apple TV+

The late Steve Jobs infamously called streaming video (i.e. Apple TV) a “little hobby,” dismissing the medium despite the burgeoning rise of Netflix and Amazon Prime Video.

Perhaps Apple should heed Jobs’ apparent indifference.

The tech giant is now diving into the SVOD deep-end with its hordes of free cash hoping a rebranded Apple TV+ app and upwards of $6 billion in content spending will compete with upstarts such as Disney+, HBO Max, Peacock and Quibi.

While the $4.99 monthly service is free for a year if you buy any new iPhone, iPad, iPod Touch, Apple TV, or Mac computer, analysts and op-eds are tripping over themselves criticizing Apple TV+ in comparison to Disney+.

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London’s Ampere Analysis, which claims Apple TV+ has more subscribers than Disney+ and Hulu, suggests Disney+’s “Star Wars” spinoff “The Mandalorian” remains a “key driver,” with viewership dwarfing Apple’s original programs, “The Morning Show” and “See.”

“‘The Mandalorian’ maintained a higher relative interest level than ‘The Morning Show’ throughout its entire run, despite Disney+ being available in only six markets,” analyst Tingting Li wrote in a post.

Indeed, Apple TV+ launched Nov. 1, 2019, in 100 markets worldwide, yet interest in “Morning Show” and “See” dropped off after the first two weeks, according to Li.

“The Mandalorian” has the same critical rating as “Friends,” based on Ampere’s proprietary quality measure. Li says future Disney+ series will include more spin-off shows such as “Star Wars: The Clone Wars” from Lucasfilm and “WandaVision” from Marvel Studios.

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Wedbush Securities analyst Michael Pachter contends that despite a major marketing effort around Apple TV+, which included signing up Jennifer Aniston, Reese Witherspoon and Steven Spielberg for original content, the finished product thus far has been underwhelming.

“[It] only had a handful of shows at launch,” Pachter wrote in a post.

Logan Purk, analyst at Edward Jones, said the streaming service would remain a “cash drain,” due to the investments required to produce original shows.

“They are leaning towards big stars and high production values,” Purk told IndieWire.

D.A. Davison & Co. analyst Tom Forte contends that while select Apple TV+ programs are “compelling,” from an investment standpoint he doubts the content is worth the investment.

“Apple is risking brand damage by offering the service at such a low price and even giving it away for free,” Forte said.

Forbes analyst John Koetsier goes one step further. He says Apple TV+ is doomed and the sooner the Cupertino, Calif.-based company realizes that the better.

Koetsier says that after unrivaled success with iPhone, iPad, Apple Watch and Mac computers, the company is stumbling with TV+ and a sudden focus on original content.

“Apple: you are amazing at hardware. You are one of the best in the world at combining hardware, software, and services,” he wrote. “You are not a media production powerhouse.”

 

Analyst: Expect Netflix Q4 Sub Growth Miss

In recent months, Netflix critics have focused on the streaming giant’s stagnate domestic subscriber growth as evidence of cracks in the Wall Street darling’s veneer.

Longtime Netflix bear Michael Pachter, with Wedbush Securities in Los Angeles, suggests the service is going to miss meeting fourth-quarter (ended Dec. 31, 2019) domestic subscriber growth projections of around 600,000. Netflix is projecting 7 million new subscribers outside the United States.

“Domestic subs guidance and overall [earnings per share] guidance may be at risk given the heavy television advertising we observed in the latter half of Q4,” Pachter wrote in a Jan. 17 note.

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Netflix typically ramps up marketing efforts to drive lagging subscriptions when the number of existing subs not renewing (churn) increases.

The analyst contends marketing spending and a “solid slate” of high-profile new content released during the quarter should help dampen overall subscriber churn.

“We expect international subscriber growth momentum to continue,” Pachter wrote.

Indeed, the launch of Disney+ on Nov. 12 and the impending loss of most Disney and Fox content could cost Netflix another 25% of total viewing hours, according to Pachter, who ads that content from Comcast, Fox, Disney and Warner Bros. accounted for 60% to 65% of Netflix viewing hours in 2019.

“We expect most of it ultimately to migrate away,” he wrote.

That said, the flurry of new over-the-top video platforms does not imply the imminent demise of Netflix as Pachter expects the migration of third-party content to be relatively slow due to existing licensing contracts.

While it’s a guess whether Netflix (or any distribution channel) can replace content sufficient to subscribers and viewers loyal, Pachter think it is likely Netflix will pay whatever it takes to attract high quality content, and believe its competitors will be slow to gain scale.

Separate Wall Street reports say Netflix will spend upwards of $17 billion on content in 2020 — dwarfing all competitors, including Disney+.

“We expect the status quo to be largely maintained until the end of 2021,” he wrote. “For now, Netflix provides tremendous value for its subscribers.”

Netflix reports fourth-quarter fiscal results on Jan. 21.

 

Platforms Avoid Netflix Movies in Pre-Oscar Showcases

Netflix earned an impressive 24 Oscar nominations ahead of the 92nd Academy Awards on Feb. 9 — largely around two movies: Martin Scorsese’s The Irishman and Noah Baumbach’s Marriage Story.

Walmart-owned Vudu.com and exhibitors Cinemark, AMC Theatres and Regal Cinema have launched pre-Oscar events showcasing best picture nominated films — with the exception of Netflix’s titles.

That’s because Netflix — per longstanding policy — does not abide by Hollywood’s traditional theatrical release strategy affording exhibitors exclusive 90-day access. Instead, the streamer mandates all original movies be made available across all distribution channels (including theatrical) at the same time.

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This has angered exhibitors and industry insiders domestically and abroad (i.e. Cannes Film Festival) for years — the result being Netflix movies are largely ignored by major theater chains.

Indeed, Cinemark’s “Annual Oscar Movie Week Festival,” which runs from Feb. 3 to 9, enables consumers (for $35) to screen all nominated films — with the exception of Netflix’s titles. Vudu is taking preorders for Oscar-nominated titles, with the exception of The Irishman and Marriage Story (which have not been slated for a digital sellthrough release).

“I don’t see the utility of making a film available on VOD or in theaters, if it’s available for free to anyone with a subscription or trial account at Netflix,” said Wedbush Securities media analyst Michael Pachter. “Netflix would rather people sign up for a free trial and watch these films than it would care for the 50% to 65% it might earn from a movie ticket or VOD.”

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Last year, Netflix’s first Oscar nominated best picture title, Roma, was also ignored by major exhibitors. It went on to win for best director (Alfonso Cuarón) and best foreign-language film (Mexico’s first) — but no best picture. The movie reportedly generated about $200,000 in revenue from pre-nomination screenings over the extended Thanksgiving weekend at select indie theaters in Los Angeles.

The imbroglio made headlines when director Steven Spielberg suggested movies that forgo the traditional theatrical run should not be considered for Oscars. The Academy’s annual board of governors post-Oscar meeting nixed that idea.

Netflix responded (on Twitter) at the time stressing “we love cinema” and ubiquitous distribution. “These things are not mutually exclusive,” the streamer tweeted.

While Roma did become Netflix’s first film to be included in The Criterion Collection on Blu-ray Disc and DVD (due Feb. 11), it arguably left millions of dollars in box office revenue on the table.

“If Netflix wants to really be a movie company, and not just a highly successful television company, why won’t they consider the traditional movie business model?,” John Fithian, CEO of the National Association of Theater Operators, wrote in a 2018 blog post. “Wouldn’t Netflix make more money and establish a much deeper cultural conversation by offering a true and robust theatrical run first, and offering exclusive streaming to its subscribers later?”

 

‘Friends’ No More: Netflix Loses Key Content to Start 2020

New Year’s Day 2020 started ominously for Netflix as it officially no longer can stream ongoing syndication hit “Friends,” the former NBC sitcom that introduced Rachel, Monica, Ross, Chandler, Joey and Phoebe to American living rooms and made household names of Jennifer Aniston and others.

The 26-year-old series stopped airing on primetime television 16 years ago, but has remained a lucrative product on syndication, packaged media and streaming.

Netflix lost exclusive “Friends” streaming rights to WarnerMedia’s pending streaming service HBO Max, which paid $425 million over five years to snag all 236 episodes of the series. “Friends” reportedly was the second-most-popular series on Netflix in 2018, according to Nielsen.

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HBO Max reportedly spent billions more to secure exclusive streaming rights to “South Park” and “The Big Bang Theory”.

“How [‘Friends’ exit] impacts [Netflix] in terms of subscribers … will really depend on what else they have coming up that we’re not focused on,” Courtney Williams, Europe regional director for Parrot Analytics, told Vanity Fair.

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Indeed, Netflix original series “Stranger Things” and “The Witcher” continue to congregate atop weekly Parrot Analytics charts tracking the most on-demand programming.

“I don’t think any specific content matters at all to Netflix,” Michael Pachter, media analyst at Wedbush Securities, said in an email. The analyst contends the bigger threat to Netflix is when other content creators collectively divert content toward proprietary services.

With Netflix increasingly losing Disney/Fox, NBC Universal and Warner Bros. content, consumers will feel compelled to try new services offering recognizable programming and/or favorite shows, according to Pachter.

The analyst believes Netflix will lose around two-thirds of its content (measured in viewing hours) and will have a tough time replacing that with content of similarly perceived quality. At the same time, Pachter says competitors such as HBO Max will take awhile to gain traction with consumers.

“We expect the [Netflix No. 1] status quo to be largely maintained until the end of 2021,” he said. “For now, Netflix provides tremendous value for its subscribers.”

Tale of the Tape: Streaming Video War Fees

With the streaming video market beginning to resemble a heavyweight prize fight involving numerous contenders, a “tale of the tape” analysis is in order to better understand costs associated with each “fighter” (service).

Apple launched Apple TV+ on Nov.1 for $4.99 — arguably the lowest-priced SVOD service on the market. The service is considered a significant threat to Netflix ($8.99) due to the Apple name and star-studded content (“The Morning Show,” starring Jennifer Aniston, Steve Carell and Reese Witherspoon).

Wedbush Securities contends Apple TV+ can generate 100 million subs in the next four years due in part to a global iPhone install base of around 900 million users.

“While this is an obvious threat to Netflix, Apple TV+ only has a handful of shows at launch,” analyst Michael Pachter wrote in a note.

The Nov. 12 launch of Disney+ ($6.99) could cost Netflix 25% of total viewing hours as much Disney/Fox content migrates from the SVOD pioneer to Disney+, according to Wedbush.

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Disney/Fox controls all of Netflix’s canceled Marvel Defenders Universe series (“Daredevil,” “Jessica Jones,” “The Punisher,” “Luke Cage” and “Iron Fist”) and Disney+’s upcoming Marvel Cinematic Universe series (“The Falcon and the Winter Soldier,” “Wanda Vision,” “Loki,” “What If…?,” and “Hawkeye”), popular series such as “The Simpsons,” and an unrivaled film library.

“We estimate that by the end of 2021, Netflix will have virtually no content from Disney, Fox, Warner Bros. or NBC Universal, and we think its efforts to replace that content with originals will only partially succeed,” Pachter wrote.

Disney earlier this year agreed to purchase Comcast’s stake in Hulu ($5.99) for about $5.8 billion by 2024. While Hulu continues to lose billions, which amount to the excess license fees paid to corporate owners over the revenue it generates, Pachter contends if Disney can grow Hulu’s subscriber base, it should be able to achieve breakeven and manage to gain market share from Netflix.

Disney is offering a subscription package with Disney+, ESPN+ and Hulu to drive greater subscriber adoption of all services.

As Netflix has developed more than 100 original series seasons outside of the U.S., it has relied on ‘second window’ content for the bulk of its viewing hours, according to Pachter.

“We estimate that fully 90% of viewing hours on Netflix are consumed by second window shows, and we estimate that Disney, Fox, Warner Bros. and NBC Universal account for 65% of total Netflix viewing hours,” he wrote.

Pachter estimates that by the end of 2021, Netflix will have virtually no content from Disney, Fox, Warner Bros. or NBC Universal.

“The company’s licensing of ‘Seinfeld,’ beginning in 2021 will help to soften the blow, and we expect [the show] to account for 5% or more of Netflix viewing hours,” wrote the analyst.

In 2015, Amazon Prime Channels began partnering with various third-party SVOD services offering domestic Prime members access to curated groups of content.

Monthly fees vary from $2.99 to $9.95 following a free trial period lasting between seven and thirty days. Showtime and Starz are priced at $8.99 each. Amazon has since added more channels, including HBO for $14.99 and Cinemax for $9.99.

AT&T TV Now: $135.00 Ultimate — 125+ live channels; $124.00 Xtra — 105+ live channels; $110.00 Choice — 85+ live channels; $93.00 Entertainment — 65+ live channels; $86.00 Optimo Más — 90+ live channels; $70.00 Max — 50+ live channels, including HBO and Cinemax; $50.00 Plus — 40+ live channels, includes HBO.

Hulu with Live TV: $50.99 No commercials plus live TV; $44.99 Limited commercials plus live TV.

YouTube TV: $50.00 YouTube TV — stream live TV from 50+ networks; $11.99 YouTube Premium — ad-free and offline video and music.

Sling TV: $25.00 Sling Orange — 34 channels of live shows, sports, and news; $25.00 Sling Blue — 47 channels of local tv, regional sports, and live shows, sports and news.

Netflix: $15.99 four-screen ultra-high-definition streaming; $12.99 two-screen high-definition streaming; $8.99 single-screen standard definition streaming.

HBO Now: $14.99 Standalone subscription to stream HBO on demand.

HBO Max: $14.99 Arriving May 2020; new home of HBO and WarnerMedia (Warner Bros., New Line, DC Entertainment, CNN, TNT, TBS, truTV, The CW, Turner Classic Movies, Cartoon Network, Adult Swim, Crunchyroll, Rooster Teeth, Looney Tunes, and more. Will have original programming, exclusive streaming rights to “Friends,” “The Fresh Prince of Bel-Air” and “Pretty Little Liars.”

Cinemax: $9.99 Max Go — standalone subscription to stream Cinemax on demand.

Amazon Prime Video: $12.99 monthly Prime membership; $9.92 annual Prime membership for $119 per year; $8.99 standalone video subscription.

Hulu: $5.99; $11.99 no-commercials subscription option for all non-live content.

Showtime: $10.99 standalone subscription to stream Showtime on demand.

Starz: $8.99 Standalone subscription to stream Starz on demand.

Apple TV+: $4.99 ad-free monthly subscription for original content; TV App includes access to subscribed cable content and most standalone SVOD subscriptions.

Disney+: $6.99 Standalone subscription to stream Disney, Pixar, Marvel, Star Wars, National Geographic, and some Fox content (“Simpsons”); Will be offered in a bundle with Hulu and ESPN+.

Peacock: Price not disclosed. Expect a standalone subscription from Comcast to stream NBC Universal content to be launched mid-2020.

The Roku Channel: Ad-supported service for accessing live content, movies, and series on demand provided by partners; accessible via Roku device or web browser.

IMDb TV: Ad-supported service for accessing movies and series on demand provided by partners; accessible via IMDB.com or any Fire TV devices.

Crackle: Ad-supported service for accessing movies and series on demand provided by Sony Pictures and content partners, accessible via most connected devices.

Tubi: Ad-supported service claims 20 million average monthly users and more than 132 million hours streamed in September alone.

 

High-Profile SVOD Newcomers Spearhead Crowding Market

As widely reported, Apple and Disney are launching separate high-profile branded SVOD services next month, with NBC Universal slated to do the same next year.

The moves prompted AT&T to announce a public unveiling on Oct. 29 of WarnerMedia’s subscription streaming video platform HBO Max — months before its early 2020 launch.

Each new service has a lot riding as parent media/tech companies forge full-steam ahead into crowding over-the-top video waters heretofore controlled by Netflix, Amazon Prime Video and Disney-owned Hulu domestically.

On the retail end, consumers now face myriad inexpensive SVOD services delivering original and non-exclusive content. When combined, the choices can be overwhelming and expensive.

“Options are great for consumers when it comes to deciding what to watch,” said Peter Katsingris, SVP of audience insight at Nielsen. “But they’re also decidedly complicated for an industry that continues to fragment and search for unique ways to influence their behavior and perhaps steer eyeballs toward their network, program, service or brand.”

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Indeed, Disney CEO Bob Iger calls the pending $6.99 Disney+ service “the most important product the company has launched” in his 14 years as chief executive.

Disney expects to attract 60 million-to-90 million subscribers for Disney+ through 2024, which would be more than half of Netflix’s current 158 million global subs. It is giving away the service to Verizon’s unlimited data subs as part of a promotion.

Apple is targeting more than 900 million iPhone users worldwide through various incentives for the $4.99 Apple TV+.

Short-form video competitor Quibi ($4.99) from DreamWorks Animation founder Jeffrey Katzenberg and former Hewlett-Packard CEO Meg Whitman, inked a partnership with T-Mobile, securing access to the telecom’s 83 million subscribers.

The crush of pending streaming video services prompted Netflix CEO Reed Hastings last month to tell a British audience to expect “a whole new world starting in November” following the SVOD invasion, which includes Hulu’s U.K. market expansion.

“Scale will be key in the [direct-to-consumer] space, but clearly the coming year is just the first phase in this era,” David Sidebottom, analyst with Futuresource Consulting, told the IBC365 platform. “D2C services will likely evolve, with their parent companies continuing to evaluate the benefits of D2C vs. third party [content license] agreements.”

“This will be particularly the case as services expand on an international basis, where legacy agreements, existing scale distribution partners and differing levels of SVOD uptake will be factors in their evolving D2C strategy,” he said.

Michael Pachter, media analyst at Wed bush Securities in Los Angeles, believes that with the surge of original content and catalog exclusives such as “Friends” and “The Office” migrating online, consumers have more reasons to choose OTT.

“If all that was happening was incremental services being offered, consumers might feel bamboozled,” Pachter said. “Instead, so much content is shifting to OTT services that many consumers will opt to subscribe to more than one service.”

Pachter says exorbitant pay-TV contracts paved the way for OTT video, with online TV offering a less expensive premium channel option.

“I expect cord cutters to look at rabbit ears and multiple SVOD services as a substitute. That’s why DirecTV lost 2 million subs since AT&T bought them,” he said.

More importantly, Pachter says that with Netflix losing Disney/Fox, NBC Universal and Warner Bros. content, consumers will feel compelled to try new services offering recognizable programming and/or favorite shows.

Indeed, the analyst believes Netflix will lose around two-thirds of its content (measured in viewing hours) and will have a tough time replacing that with content of similarly perceived quality.

Disney+ has an enormous library of content not available anywhere (Snow White, Fantasia, etc.) that will find its way to their service; the studio is also going to put its recent movies there and take those away from Netflix.

“That tells me that Disney+ gets to 30 million subscribers relatively quickly,” Pachter said.

He believes that Apple TV+, with just 12 original shows, will struggle with non-iPhone users unwilling to pay for limited content.

“Until Apple TV+ gets critical mass, there is no way they will be competitive,” Pachter said.

The analyst is “pretty confident” the HBO Max model will work, if it transfers existing HBO Now subscribers for a free probationary period lured by original content.

“If it’s $3 to $4 per month, they’ll get 10 million subs immediately and probably get to 80% conversion [from HBO Now] in a few years,” Pachter said.

Analyst: New Content Launches Will Help Netflix Meet Q3 Sub Growth Projections

With Netflix to report third-quarter (ended Sept. 30) financial results Oct. 16, all eyes will be on subscriber growth and whether the SVOD behemoth meets its 7 million global net sub additions estimate, including 800,000 in the United States.

Netlfix has projected topping 158 million subscribers world wide by the end of Q3.

Failure to meet projections on the eve of competitive service launches by Apple and Disney in November could see Wall Street continue to hammer the stock, which is down 33% since year-to-date high of $415 per share on June 20.

But perennial Netflix bear Michael Pachter with Wedbush Securities in Los Angeles contends the streaming service will meet its sub guidance due to a series of new releases in the quarter, including most notably the third-season launch of “Stranger Things” on July 4.

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“Upside to total subs guidance appears likely given the solid slate of new content that debuted in Q3, which should help dampen domestic churn,” Pachter wrote in a note. “We think guidance is easily attainable.”

That said, the analyst believes the Nov. 12 launch of Disney+ will expedite the impending loss of most Disney and Fox content, or about 25% of total viewing hours.

“We estimate that content from Comcast, Fox, Disney and Warner Bros. presently accounts for 60% to 65% of Netflix viewing hours, and we expect most of it ultimately to migrate away,” Pachter wrote.

 

Disney Quietly Offering Pending Streaming Service for Less Than $5 Per Month

When Disney officially launches its Disney+ subscription streaming service on Nov. 12, the monthly fee will be $6.99 per month, or $70 paid annually ($5.83).

The media giant has also been quietly offering consumers (through Oct. 11) holding annual pass memberships to its theme parks a discounted three-year subscription option priced at $170, or $4.72 per month.

But a Gizmodo.com story disclosed a link that combined with the password “PARKSPASS3YEARS” will get anyone the same discounted deal.

The offer does not include Hulu or ESPN+, which Disney is combining with Disney+ for $13 per month.

The loss-leading price is largely aimed at undermining Netflix’s SVOD market stranglehold and pricing (from $8.99), it also guarantees Disney+ will lose money for the foreseeable future.

Indeed, Disney doesn’t expect to see a profit on Disney+ until 2024 — despite subscriber projections from 60 million to 90 million worldwide, according to the company’s recent investor day event.

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By comparison, Apple’s pending $4.99 Apple TV+ SVOD service is projected to generate 100 million subs over the next three years due to heavy marketing targeting an iPhone install base exceeding 900 million worldwide, according to analyst firm Wedbush Securities in Los Angeles.

Analyst Michael Pachter says the Disney+ launch and likely loss of most Disney and Fox content on Netflix could cost the SVOD pioneer 25% of its total viewing hours.

Disney/Fox intellectual property includes all of Netflix’s cancelled Marvel Defenders Universe series (“Daredevil,” “Jessica Jones,” “The Punisher,” “Luke Cage” and “Iron Fist”) and Disney+’s pending Marvel Defenders Universe series (“The Falcon and the Winter Soldier,” “Wanda Vision,” “What If…?” and “Hawkeye”), in addition to “The Simpsons” and expansive movie catalog.

“[With] Disney launching its own service at a discount to Netflix’s subscription price, while consolidating ownership of Hulu, Netflix will have to work even harder to procure original content compelling enough to support a separate subscription,” Pachter wrote in a note. “We expect Netflix to suffer the double whammy of seeing existing content migrate to competitive services at the same time that new domestic subscribers are more difficult to attract.”

Netflix reports third-quarter financial results on Oct. 16.

 

Netflix Stock Loses All Gains Made in 2019

The end of the third quarter on Sept. 30 can’t come soon enough for Netflix.

The subscription streaming video behemoth saw all positive stock gains on Wall Street disappear at the close of trading Sept. 23 — with shares down 46% from a peak valuation in July.

With nonstop press releases touting programming defections (i.e. “The Office,” “Friends,”), executive hires, possible subscriber interest and low-ball pricing from pending SVOD newcomers Apple TV+, Disney+, HBO Max, Verizon’s BET+ and NBC Universal’s Peacock, Netflix’s invincibility has taken a beating.

Typically, any concern about Netflix would be quickly erased with the next earnings report. But following the service’s Q2 disclosure of rare subscriber losses in the United States and below-expectation sub growth internationally, all bets are off.

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Co-founder/CEO Reed Hastings himself seemed to voice caution just last week telling an industry confab in the United Kingdom that “a whole new [SVOD] world [would be] starting in November.”

Fickle Wall Street is (albeit slowly) changing its tune on Netflix.

Of the 39 analysts covering Netflix, two have “sell” ratings for the stock, while nine  have a “hold” on the shares.

Kannan Venkateshwar with Barclays said Netflix’s stock has become “very expensive” based on the growing costs required for future sub growth.

Mark Kelly, analyst with Nomura Instinct, told CNBC that increased third-party SVOD competition could make content more expensive and “diminish the price power” Netflix has exerted in recent years.

CNBC parent Comcast just expanded exposure for streaming service Xfinity Plex, and is launching the Peacock SVOD platform early next year.

Michael Pachter, a longtime Netflix bear at Wedbush Securities in Los Angeles, contends the challenges Netflix faces creating original content are no different than Disney+ & Co. face.

At the same time, Pachter says Netflix’s strategy of flooding the channels with content can’t mask quality issues.

“The company may brag about its Emmy nominations or its Oscar wins, but it has approximately 10 times as many shows eligible for Emmy consideration as HBO, which won handsomely in 2019 for multiple shows,” he wrote in a note.

Pachter suggests Netflix is on the verge of losing around 65% of its domestic viewing hours when Comcast, Warner/HBO and Disney/Fox launch services their services and allow their current deals to expire.

“We estimate that Netflix pays around $5 billion a year for this content, so it will have a ton of cash available to bid on other content, and its bid for “Seinfeld” shows that it is willing to raise the stakes for licensing content,” he wrote.

Indeed, Netflix inked an exclusive deal with “Game of Thrones” showrunners David Benioff and D.B. Weiss for a reported $200 million.

While Wall Street appears confident Netflix can continue growing subs worldwide, domestic growth will be challenged with the arrival of Disney+ and Apple TV+ in November.

“We think … that a slowing of domestic growth will continue to pressure the stock over the next several quarters,” Pachter wrote.

Analyst: Netflix to Weather Content Migration — For Now

With Netflix set to release second-quarter (ended June 30) financial results on July 17, Michael Pachter, analyst with Wedbush Securities in Los Angeles and longtime Netflix bear, contends the subscription streaming video pioneer will add 5.3 million subscribers, including 300,000 in the United States.

The tally surprisingly exceeds Wall Street consensus and Netflix’s projection of 5 million new subs, including 4.7 million international subs.

Pachter argues that despite media attention to the departures of popular TV reruns “Friends” and “The Office” from Netflix in two years, the service has more than enough content in the pipeline and willingness to spend big on new programming to weather the storm.

“Friends” and “The Office” account for an estimated 5% of all viewing on Netflix, leaving other content that accounts for 95% of viewing on Netflix in place.

Indeed, Netflix launched 21 new shows in Q2, excluding 13 returning series. That compared to six news series and 17 returning series in the previous-year period.

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At the same time, content from NBC Universal, Fox, Disney and Warner Bros. currently accounts for upwards of 65% of Netflix viewing hours, according to Wedbush.

Pachter expects the migration of third-party content away from Netflix to competing platforms to be relatively slow and is unclear whether the service can successfully replace it with quantity and quality to keep its subscribers loyal.

“We think it is likely that Netflix will pay whatever it takes to attract high quality content and believe its competitors will be slow to gain scale,” Pachter wrote in a note. “Thus, we expect the status quo to be largely maintained until the end of 2021. For now, Netflix provides tremendous value for its subscribers.”