Netflix co-founder: Disney ‘emulating' its streaming playbook: 'We’re seeing new rules of the game'

Alexandra Canal
·Producer
·3 min read

When Disney (DIS) reports quarterly earnings on Thursday, all eyes on Wall Street will be focused on Disney+, which is earning praise from one of the entertainment giant’s staunchest competitors.

“I completely have the deepest respect right now for Disney,” Netflix Co-Founder Marc Randolph told Yahoo Finance during a recent interview.

Randolph added that the company has proven its commitment to content in several ways — from restructuring its business to deferring dividends in order to boost streaming endeavors.

“This is a pretty clever move because what they’re in some ways doing is emulating the Netflix playbook,” he continued.

The fledgling streaming service has been a key driver for the entertainment and media giant, while other areas of the business have struggled to stay afloat amid the coronavirus pandemic.

At its December investor day, Disney said the platform nabbed an impressive 86.2 million subscribers as of Dec. 2 in just over a year of operation, which far surpassed even its own expectations.

Netflix reported nearly 204 million global paid subscribers as of the end of last year
Netflix reported nearly 204 million global paid subscribers as of the end of last year

Disney’s subscriber count is still significantly less than Netflix, which reported nearly 204 million global paid users as of the end of last year. However, Randolph said Disney has “fought its way up to a really strong position” while other services have lagged behind.

“We’re seeing the new rules of the game developing. This is not just announcing, this is not just having a promotion — what you have to demonstrate is that you have the content, content content,” Randolph explained.

“And it’s not just a few things. You have to have a continuous slate of new things coming out. It’s really a war of who’s prepared to make the content,” he added.

Among the current players, Netflix stands out when it comes to breadth and diversity of content — hosting everything from miniseries and documentaries to sitcoms and movies. Last month, the streamer revealed it will drop an original film every week in 2021.

Apple TV+ ‘has no excuse’ in streaming wars lag

Apple’s (AAPL) streaming efforts have flown under the radar since its late 2019 launch. To make matters more difficult for the tech giant, it seems to have a freeloader problem, with 62% of its subscribers signed up through a free promotional offer.

Currently, a free year of Apple TV Plus is gifted to buyers of its hardware devices with the hope of renewal. But according to MoffettNathanson’s Q4 2020 SVOD Tracker report, 29% of those who signed up through a free offer said they do not plan to resubscribe once the promotional period expires.

“If Apple spent one quarter as much time on content as they do on giveaways they really could play,” Randolph said, noting the company’s $2 trillion-plus market cap and $200 billion cash on hand.

“They have no excuse [and] they’re still not in it with both feet. They really have to do the entrepreneurial thing and walk up to the edge of the cliff and jump,” he added.

“Right now they have the highest churn rate. You can’t keep replacing people, you’ve got to give them a reason to stay,” he concluded.

Alexandra is a Producer & Entertainment Correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193

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