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Disney’s New Streaming Service Will Soon Destroy the Competition

Disney’s New Streaming Service Will Soon Destroy the Competition

We talk about the rise of Netflix, Amazon’s streaming service, Hulu and even YouTube but I don’t think we’ve discussed enough of the impact Disney’s new streaming service is going to have.

Yes, Disney is Developing its Own Streaming Service

If you didn’t know, Disney is developing its own streaming service that’s looking to be priced substantially below Netflix at its launch. They have been leaking bits and pieces about their new streaming service here and there so we only know a little, but I don’t think people realize how big of news this is.

Cable TV is Dying, Streaming is the New Thing

In 2015, Netflix and Hulu grew 29% to a $5.1 billion market cap while cable and satellite tv only grew by 3%. It’s safe to say that streaming is taking over. Netflix alone has 109.3 million subscribers and anticipates another 6.3 million subscriptions this quarter. Those 109.3 million people are paying $10.99/month. That’s $1,202,300,000 per month. Not bad.

With Streaming, Content is King

Netflix realized a while ago, that anyone can get copy rights to movies and tv shows to be a streaming service, but what makes you unique is the original content you produce. That’s content you exclusively control. Think “House of Cards” you can’t get that anywhere except Netflix. Those original shows draw crowds of people to Netflix and they stay for the wide range of shows to watch. So much so that most people don’t need cable anymore other than sports, which have started streaming as well.

If you’re curious to know how serious original content is Netflix. Netflix plans to spend $8 billion on original content in 2018.

No One Has More Content Than Disney

Nearly every childhood movie (Lion King, Aladdin, 101 Dalmatians, etc.) is owned by Disney. Now add onto those the Pixar movies (Toy Story, Finding Nemo, Cars), Marvel Studios (Iron Man, Captain America, Thor, Avengers, etc.) as well as Lucas Films (Star Wars). These are just a taste of the original content has, and can start streaming on their own network when ready. They own the exclusive rights to these films that can be leveraged in their new streaming service.

These are huge name franchises here! The Marvel Films alone have averaged $840 million at the global box office per movie.

Then you also need to consider all the Disney channel content and shows that it’s created for tv, soon going to be available in one location. I wouldn’t be surprised to see the Disney Streaming service being the one streaming service owned by every mom in America.

Here’s a taste of the Disney Vault of movies.

Now start to consider what if Disney started to produce new content, including Star Wars, Marvel and/or movies exclusively for their new streaming service. That will be a huge draw to the service!

As much as Netflix, Hulu, Amazon Video and YouTube can crank out content. Disney has a winning formula it’s used for years to amass loads of quality content and proven itself over and over. It WILL win the original content game. If Disney can continue to dominate the original content game, they will win the streaming game.

When Does Disney’s Streaming Service Start?

The only thing we know is that Disney plans to debut their streaming service in 2019. Coincidently, this is when their current contract with Netflix is through. So when Netflix loses all their Disney content (think Marvel Series like Jessica Jones, Luke Cage, Daredevil, etc plus other Disney content), Disney will likely publish these shows on their own streaming service.

Keep in mind, they’ll start their ESPN streaming service in 2018 to start catching those cable-cutters who love sports. This will give them an opportunity to help hash out all the bugs for their larger digital content streaming service.

Will This Impact the Streaming Industry?

To give you an idea of the impact the news about a Disney streaming service. When Disney made the announcement, Netflix stock price dropped 4%.

Plus Disney has the resources not only from its box office hits, but it’s depths of resources to undercut all these other streaming services in price. So while Netfilx will continue to raise it’s monthly subscription price to pay for their original content, Disney win the war on prices and simply choke Netflix out. We’ll likely see Amazon Video and Disney as the lasting champions in the streaming game.

Conclusion

I am going to try to pick up a few more shares of Disney while the price is low before 2019. It’s not the greatest dividend for my dividend strategy at a 1.51% dividend, but it’s a great company with a great plan to be the #1 player in streaming services.

If you liked this article, I’d love if you shared it! =)

Andrew
AndrewWallet Squirrel Found and Finance Ninja

Stock Watch List- Brookfield Infrastructure Partners (BIP)

This week after listening to the Motley Fool Money podcast, I researched Brookfield Infrastructure Partners (stock ticker: BIP) for my Stock Watch List. The Motley Fool commentators said BIP was on their watch list, so I looked into it for my own portfolio.

Stock Watch List

My Stock Watch List is a collection of companies I’m looking into invest in. I’m either currently too broke to currently buy them or I’m looking into them to buy them soon. Either way, these analyses help me decided to buy or not with the extra money I earn.

What is Brookfield Infrastructure Partners?

Basically, they own one of the largest infrastructure networks globally. This is the infrastructure for the transportation and storage of energy, water, freight, passengers, and data. They earn money by way of fees for people to use their infrastructure, they have a 15.1 billion market cap on infrastructure as an MLP (Master Limited Partnership). So no matter if electricity or oil is costly or cheap, it still costs money to transport and Brookfield Infrastructure Partners makes that money.

What I like about Brookfield Infrastructure Partners

  • They have a 4.3% dividend. Plus many of these utilities are regulated by countries/regions and those support long-term contracts which produce stable cash flow. In addition, they have $1.1 billion of planned investments coming down the pipeline in the following years to generate high growth.

    5-year Stock Price for BIP – Graph from Yahoo Finance

  • They are geographically diverse spanning over 5 continents and income diverse earning money from 35 different businesses across four different infrastructure groups including Utilities (electric and natural gas transportation), Transportation (railways, ports and toll roads), Energy (energy transmission, distribution, and storage) and Communication Infrastructure (communication towers).

Brookfield Infrastructure Partners – Investor Fact Sheet, August 2017

  • I love this business model where businesses will pay to use this infrastructure regardless if the stock market is up or down. Businesses need to get their goods/services from A to B and Brookfield owns those connecting lines. Many MLPs follow this business structure but Brookfield seems to be doing a great job and consistently growing to produce additional income. Plus this reoccurring revenue makes Brookfield traditionally a reasonably safe and reliable stock.

What I don’t like about Brookfield Infrastructure Partners

  • My biggest complaint with Brookfield Infrastructure Partners, personally, is that it’s an MLP and that makes taxes a bit more complicated. I honestly can’t speak to the tax issues since I’m not familiar with them myself, I just know they are more complicated.

Conclusion

I have several MLPs that I’d love to invest in like Kinder Morgan, but Brookfield Infrastructure Partners is my favorite so far. However, I likely won’t invest in it until I understand a bit more about the tax implications. So, for now, I’ll continue to watch it and if it gets any more attractive, I’ll consult a tax professional on how it would affect my taxes and not cause a headache.

Do you own any MLPs?