One Month After Disney+ Launch, These Analysts Still Love Netflix

It’s been a month since Walt Disney Co DIS rolled out its answer to the Netflix Inc NFLX distribution model. Early subscription trends don’t look too bad for the original streaming king.

Accept No Substitutes

A survey by Bank of America found that just 6.5% of Disney+ subscribers intend to cancel their Netflix accounts, and 65% of respondents do not consider Disney+ a substitute for Netflix. The total proportion of Netflix users intending to cancel the service has dropped from 5% to 4%. Overall, Bank of America sees space for Netflix to grow U.S. subscriptions.

“Our survey and company reports suggest healthy U.S. adoption of Disney+, but we are encouraged that most early Disney+ users do not see it as a substitute for Netflix,” analysts Nat Schindler and Justin Post wrote in a report. “While it is possible that there is some incremental churn from Disney+, it looks to be modest and we do not see any broad trend changes in our survey data compared to October.”

Manaegble Churn

A parallel survey by Cowen offered a more concerning outlook. The study suggests that 1.1 million Netflix subscribers defected to Disney+. Analyst John Blackledge suspects as many as 1.4 million could churn in the fourth quarter, although some would have left even without the Disney+ fallback. The incremental churn, then, “appears manageable.”

And the threat of competition may be short-lived.

“Direct-to-consumer is an over-used phrase,” Morgan Stanley analyst Benjamin Swinburne said. “The reality is we will be re-bundling these things over the next five years. It will be probably look more like what we’re used to seeing (with cable). That’s better for consumers and better for content creators.”

Cowen reiterated an Outperform rating and $415 price target on Netflix. Bank of America reiterated a Buy rating and a $426 price target.

Since the release of Disney+, Netflix shares have risen 10%. The stock traded around $323.66 per share at time of publication.

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