Kyle Walsh | CNBC

The Future of Netflix is Disney & Amazon

How the streaming giant is likely to be disrupted in 2020

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Mar 10

I believe that 2020 is going to be a pivot year for the future of streaming TV.

This is because of the massive scale that Amazon and Disney can operate to challenge the first-mover dominant status Netflix has in 2019. Combined with the likes of Apple and ESPN, competition is about to ramp up shortly.

Let's take a look at why that is in this article.

Disney's streaming service will rival Netflix with 160 million subscribers, JP Morgan says

Disney will close "vault" for good as it moves film library to streaming service. Think about that for a moment, that's Disney's entire movie list on to a streaming platform. J.P. Morgan analyst Alexia Quadrani thinks Disney will acquire in the area of 160 million monthly subscribers over time that will directly rival Netflix.

Exclusive streaming rights to titles like Frozen will encourage subscriptions.

As Disney+ launches it will vault already existing favorites into one platform including:

  • Legacy Disney titles
  • Star Wars
  • Marvel
  • National Geographic content

And all the happy goodness of entertainment that is the Disney brand for children and nostalgics alike. If you compare the potential then of Disney+, you have to imagine the big three of the future is Netflix, Disney+ and Amazon. We'll get to Amazon later.

  • J.P. Morgan tells clients to expect Disney+ to eventually draw 160 million subscribers from around the world, more than Netflix's current 139 million.
  • Disney announced the new service in November after telling shareholders it will pull all its movies from Netflix in 2019 .

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Disney will still dominate Children Viewing

According to the U.S. government census, there are 34.5 million family households in the U.S. with children under 18, and we believe 75% of these households will eventually sign up for Disney+ due to the service's popular appeal, exclusive content, and brand recognition. --- J.P Morgan analysts Alexia Quadrani

The decline of Netflix will mean a new streaming wars where Chinese platforms will also increase their global marketshare. But Amazon's bet of entertainment is even more impressive than anything Netflix has done up to this point, and that's a big ask already.

Amazon's LOTR Content will be bigger than Game of Thrones

When Amazon pursued the rights to a "Lord of the Rings" series in 2017 , the company knew it would have to overcome some major obstacles to lure the J.R.R. Tolkien estate to its video-streaming platform.

Amazon is too smart and is spending too much NOT to get this right. Amazon just needs a few more hits to make Amazon Prime Video legit as a mainstream viewing solution.

Netflix, with more than 100 million subscribers, pioneered the on-demand model with hits such as "House of Cards" and "Orange is the New Black." That's all fair and well but the combined entry of Disney, Apple and the maturation of the initiatives of Amazon's, Baidu and Alibaba will mean a new world of streaming entertainment.

The "Lord of the Rings" series will start production in the next two years. So by around 2022 we'll know just how good Amazon content will be. By that time Disney will be a major streaming player.

Meanwhile, Disney will push Netflix financially in a significant way.


Amazon is the next Hollywood

Amazon will also go after the NFL and MLB sports content, anything that will add sustainable value to its ecosystem. Amazon will eventually outspend Netflix in original content by quite a large margin.

With AWS profitability fueling Amazon's entertainment, it's a sustainable push of decades, not years.

2019 is just the beginning for Amazon Prime Video

Netflix doesn't have enough financial profitability or backing to survive the coming onslaught, sad as that may seem now. AWS now dominates the Cloud industry with 34 percent market share. It's the main driver of Amazon's profitability, earning $7.3 billion on sales of $25.7 billion last year in 2018. From how YouTube is evolving to Hulu, there's a lot of moving parts in the future of streaming as well.

So far, Amazon has used video primarily as a way to build Prime subscriptions. But the company's investments point to blending content and commerce in ways the world hasn't yet seen, eventually pitting Amazon against Apple and other tech giants for control of the home. Amazon is beating Apple and Google in the home, and this will be a huge advantage in the future of how tech companies scale in healthcare.

As for entertainment, YouTube has beat Facebook by far for the younger consumer. Due to business model considerations Amazon and Apple are most likely to go after original content in the end displacing players like Disney and Netflix. By 2025 this will be fairly clear.

For ordinary citizens and consumers, the golden age of streaming is in the future not the present. This is because as competition heats up monthly subscriptions will actually go down, not up. That is basically like saying Netflix is doomed as a pure-play streaming and original content platform.