Netflix Rises Again While Disney Struggles To Revive Its Magic

Legacy media companies are entering dark times as costs mount, Hollywood writers are still on strike and streaming king Netflix Inc NFLX is making a comeback. The first half of year has been a colossal disappointment for those who hoped for a rebound from a rocky 2022, with a slowdown in streaming subscriptions.

Even the magic of the Walt Disney Company is fading. For almost two decades, Bob Iger was the 'King of Hollywood' as he transformed the legendary entertainment company with the game-changing acquisitions of Marvel, Pixar and Lucasfilm. After a disastrous two-year tenure of his successor, Iger is back for a second reign as CEO, but the Disney he came beck to is long the same: the legacy businesses are in decline, the streaming business is losing money and as a consequence, the share price has slumped. 

Disney Is No Longer The Same

Creative output is the lifeline of Disney and Iger’s leadership has always been all about content. Disney Plus was supposed to be Iger’s grand move prior to his departure. Instead, Iger is now facing a troubled company that just laid off 7,000 employees, that is pulling programming from streaming services to save on costs and the animation business is no picnic with the latest Pixar movie “Elemental” being a financial flop with the lowest opening weekend gross since Toy Story debuted in 1995. Unsurprisingly, shares are struggling over the last five months. But even Iger’s legacy is now in question as there’s no clear growth narrative ahead on how Disney aims to restore the magic to its kingdom. 

Netflix Is Rising Again

Netflix sparked enthusiasm with a crackdown of password sharing that could potentially lead to tens of millions of signups. Unlike Disney, Netflix shares surged over the past five months and even outpaced the S&P 500. Netflix is setting the stage for its next phase of content growth by trimming costs and boosting engagement. CFRA analyst Ken Leon told Yahoo Finance that international content is Netflix's biggest competitive advantage over its rivals. Earlier this week, Netflix Co-CEO Ted Sarandos confirmed the company’s $2.5 million commitment to fund original Korean content over the next four years, with plans to add Korean unscripted series and movies to its original programming. Generally speaking, productions outside the U.S. tend to be cheaper without sacrificing quality. Most importantly, the demand for international content is there and so is the acceptability within the US audience. Live sports is certainly another dimension that Netflix can exploit but in its own unique approach as it produced sports-adjacent content like "Formula 1: Drive to Survive" without committing to big-ticket deals. 

The Prolonging Hollywood Strike Is Actually Good News For Netflix

Friday may bring more bad news for Disney as film and TV actors will be joining the strike if writers don’t strike a deal with Hollywood studios by then. If Hollywood comes to a shutdown, Netflix will be the beneficiary as it continues to churn out international content that is unaffected by the strike.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.