Connect with us

Technology

Netflix vs Disney: Who’s Winning the Streaming War?

Published

8 months ago

on

Netflix subscribers versus Disney

Netflix vs Disney: Who’s Winning the Streaming War?

Netflix is well-known as one of the pioneers of mass-market video streaming. The service has become so ubiquitous that the word “Netflix” is now synonymous with watching a movie or television show.

But, while it’s one of the most recognized streaming platforms in the world, has it been able to maintain its dominant position in the industry now that more competitors have entered the fray?

This graphic by Truman Du shows how Disney’s streaming empire (Disney+, Hulu, and ESPN+) has quickly gained subscribers and is giving Netflix a run for its money.

Netflix: The Beginning

Founded in 1997, Netflix started out as mail-order DVD rental company. One of the co-founders Reed Hastings told Fortune Magazine that he got the idea for Netflix after he was charged a $40 late fee for a VHS he’d rented out.

By 2007, Netflix had evolved from a relatively modest DVD rental company into a ground-breaking subscription-based streaming service. While there were a few other streaming platforms at the time, Netflix had a significant first mover’s advantage, operating on a subscription model and acquiring a wide pool of distribution rights from different studios.

This allowed the company to grow rapidly and establish itself as an industry leader. From 2007 to 2022, Netflix’s subscriber base grew from 7 million to 221 million, nearly 3,000%.

When Did Disney Enter the Scene?

The Walt Disney Company got involved in the streaming industry in 2009 when it first joined Hulu as a minor stakeholder, but became more directly invested in 2016 when it bought a 33% stake in BAMTECH Media, a video streaming technology company.

Disney eventually bought a majority stake in BAMTECH Media and in 2018, the company rebranded to Disney Streaming Services. In addition to launching Disney+ and ESPN+, Disney’s acquisition of 21 Century Fox gave the company a majority stake in other streaming platforms including Hulu and Star+.

While Disney arrived much later on the scene compared to Netflix, it didn’t take long for Disney’s platforms to gain traction. And as of Q2 2022, Disney’s streaming empire (Disney+, Hulu, and ESPN+) has more combined subscribers than Netflix, and are gaining at a rapid pace.

Netflix

PlatformSubscribers (Q2 2022)% Growth (y-o-y)
Netflix220.7 million5.5%
Netflix Total220.7 million5.5%

Disney

PlatformSubscribers (Q2 2022)% Growth (y-o-y)
Disney+152.1 million31.1%
Hulu46.2 million7.9%
ESPN22.8 million53.0%
Disney Total221.1 million27.3%

Other streaming services like HBO Max and Amazon Prime Video also continue to pick up steam, which begs the question: has the Netflix empire started to tumble?

Recent Trouble With Netflix

In April 2022, Netflix shared its Q1 results which showed a loss of 200,000 subscribers. Though barely a fraction of its 200+ million subscribers, it was Netflix’s first drop in subscribers in over 10 years.

This sent the company’s share price plummeting below $200, the lowest since 2017. As October 10, 2022, its share price still sits at $230, over 30% down from before the Q1 announcement in April 2022.

But change for the company is on the horizon. Netflix has announced that it plans to launch a cheaper, ad-supported service in November—something that other streaming platforms like Peacock and Paramount+ have already been offering customers for a few years.

green check mark icon

This article was published as a part of Visual Capitalist's Creator Program, which features data-driven visuals from some of our favorite Creators around the world.

Subscribe to Visual Capitalist
Related Topics:
Click for Comments

Technology

Nvidia Joins the Trillion Dollar Club

America’s biggest chipmaker Nvidia has joined the trillion dollar club as advancements in AI move at lightning speed.

Published

1 day ago

on

May 30, 2023

By

Nvidia Joins the Trillion Dollar Club

Chipmaker Nvidia is now worth nearly as much as Amazon.

America’s largest semiconductor company has vaulted past the $1 trillion market capitalization mark, a milestone reached by just a handful of companies including Apple, Amazon, and Microsoft. While many of these are household names, Nvidia has only recently gained widespread attention amid the AI boom.

The above graphic compares Nvidia to the seven companies that have reached the trillion dollar club.

Riding the AI Wave

Nvidia’s market cap has more than doubled in 2023 to over $1 trillion.

The company designs semiconductor chips that are made of silicon slices that contain specific patterns. Just like you flip an electrical switch by turning on a light at home, these chips have billions of switches that process complex information simultaneously.

Today, they are integral to many AI functions—from OpenAI’s ChatGPT to image generation. Here’s how Nvidia stands up against companies that have achieved the trillion dollar milestone:

Joined ClubMarket Cap
in trillions		Peak Market Cap
in trillions
AppleAug 2018$2.78$2.94
MicrosoftApr 2019$2.47$2.58
AramcoDec 2019$2.06$2.45
AlphabetJul 2020$1.58$1.98
AmazonApr 2020$1.25$1.88
MetaJun 2021$0.68$1.07
TeslaOct 2021$0.63$1.23
NvidiaMay 2023$1.02$1.02

Note: Market caps as of May 30th, 2023

After posting record sales, the company added $184 billion to its market value in one day. Only two other companies have exceeded this number: Amazon ($191 billion), and Apple ($191 billion).

As Nvidia’s market cap reaches new heights, many are wondering if its explosive growth will continue—or if the AI craze is merely temporary. There are cases to be made on both sides.

Bull Case Scenario

Big tech companies are racing to develop capabilities like OpenAI. These types of generative AI require vastly higher amounts of computing power, especially as they become more sophisticated.

Many tech giants, including Google and Microsoft use Nvidia chips to power their AI operations. Consider how Google plans to use generative AI in six products in the future. Each of these have over 2 billion users.

Nvidia has also launched new products days since its stratospheric rise, spanning from robotics to gaming. Leading the way is the A100, a powerful graphics processing unit (GPU) well-suited for machine learning. Additionally, it announced a new supercomputer platform that Google, Microsoft, and Meta are first in line for. Overall, 65,000 companies globally use the company’s chips for a wide range of functions.

Bear Case Scenario

While extreme investor optimism has launched Nvidia to record highs, how do some of its fundamental valuations stack up to other giants?

As the table below shows, its price to earnings (P/E) ratio is second-only to Amazon, at 214.4. This shows how much a shareholder pays compared to the earnings of a company. Here, the company’s share price is over 200 times its earnings on a per share basis.

P/E RatioNet Profit Margin (Annual)
Apple30.225.3%
Microsoft36.136.7%
Aramco13.526.4%
Alphabet28.221.2%
Amazon294.2-0.5%
Meta33.919.9%
Tesla59.015.4%
Nvidia214.416.19%

Consider how this looks for revenue of Nvidia compared to other big tech names:

For some, Nvidia’s valuation seems unrealistic even in spite of the prospects of AI. While Nvidia has $11 billion in projected revenue for the next quarter, it would still mean significantly higher multiples than its big tech peers. This suggests the company is overvalued at current prices.

Nvidia’s Growth: Will it Last?

This is not the first time Nvidia’s market cap has rocketed up.

During the crypto rally of 2021, its share price skyrocketed over 100% as demand for its GPUs increased. These specialist chips help mine cryptocurrency, and a jump in demand led to a shortage of chips at the time.

As cryptocurrencies lost their lustre, Nvidia’s share price sank over 46% the following year.

By comparison, AI advancements could have more transformative power. Big tech is rushing to partner with Nvidia, potentially reshaping everything from search to advertising.

Continue Reading

Subscribe

Popular