Competition in the video streaming sector is heating up, with Disney unveiling Thursday its plans to enter the space — but one analyst said the entertainment giant has a "major advantage" over the likes of incumbents like Netflix.
"It's called back catalog," said Mark Mahaney, lead technology analyst at RBC Capital Markets, referring to past content the company may have previously produced.
To illustrate his point, Mahaney cited Disney's expenditure plans of "spending a billion dollars on original content each year." In comparison, "Netflix is going to be spending seven or eight times that much," he told CNBC's "Street Signs" on Friday.
That's because Netflix lacks a portfolio of content, leaving the company in the position of needing to rent content that could be gone if its partners decide to end their relationship, Mahaney said. One such instance was in 2017, when Disney announced its intention to remove its movies from Netflix to develop its own streaming service instead.
In fact, licensed content on Netflix has done better, compared to the viewership that its original shows have attracted, said a Variety report in December that cited data from 7Park Data — a company tracking on-demand video consumption on streaming giants Netflix, Hulu and Amazon.
"There is going to be pressure here on Netflix to continue to differentiate their service with more and more original content spend, that's the major advantage ... that Disney has — they've got a back catalog," Mahaney said.
Room for competition
On the subject of competition, the tech expert said there was likely room for both Netflix and Disney in the streaming market.
"I think there's actually also room in the market for Disney to succeed," Mahaney said.
Even as Disney laid out its goal of reaching 60 to 90 million subscribers within five years, Netflix is "on track" to having more than 300 million members globally by that point, he said, adding that there's room for both services to reach those scales.
"We did our survey work here, we think the vast majority of consumers are perfectly willing to sign up for more than one service," he said. More than 70 percent of respondents in the RBC survey indicated they were willing to sign up for two or more platforms, he added.
"If you've got (a) good product out there, especially if people shave back the overall (pay TV) bundle, we think they'll buy both Netflix and possibly Disney," Mahaney said.
Beyond Disney's impending entry into the streaming space, other companies such as NBCUniversal and AT&T have also announced their intentions to launch similar services in the coming months.
— CNBC's Lora Kolodny contributed to this report.
Disclosure: NBCUniversal is the parent company of CNBC.