On Tuesday, Bernstein highlighted significant trends in the streaming industry, focusing on the performance of major players in the US Media & Telecom sector during the fourth quarter.
According to Parrot Analytics, Netflix is anticipated to outperform expectations for subscriber growth, adding approximately 11 million subscribers compared to the consensus forecast of 9.2 million.
This growth is partly attributed to the success of Netflix's ad-tier offerings, which are expected to see a year-over-year increase of over 50% in 2024, as well as robust performance in the rest of the world.
Netflix's targeted content strategy, which caters to specific markets, has contributed to its strong subscriber numbers. The company's focus on women's content in France, increased local content offerings in Japan, and competitive original programming in Brazil against local players with extensive licensed catalogs has been particularly effective. Comcast, maintaining a healthy gross profit margin of nearly 70% and generating substantial free cash flow, continues to invest in content development across its entertainment divisions.
In contrast, Disney's growth is projected to slow in the fourth quarter due to challenging comparisons with its third-quarter theatrical releases.
Warner Bros. Discovery is expected to see strengthened growth, driven by its international presence.
Parrot Analytics notes that while Disney remains a leader in original movie demand globally, WBD has closed the gap in the fourth quarter, partly due to the high demand for streaming Deadpool & Wolverine and Inside Out 2 prequels in the previous quarter.
Furthermore, the analysis indicates that Disney and Warner Bros. are not keeping pace with Netflix in attracting a key demographic—cord-cutting fathers—primarily due to their TV content offerings.
Netflix has historically dominated in TV shows, both licensed and original, and this trend appears to be accelerating, widening the demand gap between Netflix and its competitors, particularly for content targeted at males and the over-30 audience.
Despite these challenges, Disney has seen success with its local original TV shows, which, although limited in quantity, have garnered significant demand. This suggests that while Netflix's growth is strong, there are areas where Disney's focused content strategy is resonating with audiences.
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