Jon Erlichman

Anchor

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As Apple Inc. and Walt Disney Co. prepare to launch their streaming video services, Netflix Inc.’s latest results highlight how much new entrants to the market will need to grow to catch the industry leader.

As of the end of its third quarter, Netflix’s paid user base was 158.3 million worldwide. That’s up from roughly 130 million paying subscribers at the same time last year.

By comparison, Disney predicts its service, which launches November 12, will grow to between 60 and 90 million subscribers over the next five years.

“Netflix can keep its edge in a streaming video industry undergoing radical change, even as Disney gives it a run for its money,” Bloomberg Intelligence analyst Geetha Ranganathan wrote in a recent research note. Bloomberg Intelligence expects those two companies to control 60 per cent of the U.S. streaming market by 2024.

Netflix’s continued growth is a reminder it is no longer the underdog.  For years, it was viewed as a Silicon Valley disruptor, taking on Hollywood’s big players.

"It’s a little bit like, is the Albanian army going to take over the world?” former Time Warner CEO Jeff Bewkes famously told the New York Times in 2010. "I don’t think so.”

For current context, Albania is home to approximately 2.8 million people. With 163.9 million subscribers globally (paid and free trials), Netflix’s user base would make it the ninth-largest country in the world by population, with more people than countries such as Russia, Mexico and Japan.

When Bewkes made the comments in 2010, Time Warner’s HBO was generating more revenue than Netflix.  That’s no longer the case.  

AT&T Inc. has since acquired Time Warner and rebranded it as WarnerMedia.  The new company is set to unveil its own streaming service at the end of this month.

Netflix is well aware of all of the competitive threats.  What makes the company unique is its willingness to address rivals by name in its quarterly letters to shareholders.  The comments are often complimentary, with Netflix instead focusing on the massive size of the streaming market and its own ability to keep growing.

In the latest shareholder letter, Netflix said "The upcoming arrival of services like Disney+, Apple TV+, HBO Max, and Peacock is increased competition, but we are all small compared to linear TV. While the new competitors have some great titles, none have the variety, diversity and quality of new original programming that we are producing around the world.”