Media giants Disney and Netflix have both proven to be extremely successful companies over the years, and each landed a spot on the Forbes list of the world's most valuable brands in 2018. Now the two are in a battle to win over the world's binge-watchers, as Disney recently announced the latest iteration of its streaming platform, Disney+.
Which company's stock would have made you richer if you invested 10 years ago, though? The answer is Netflix — by a lot. According to CNBC calculations, a $1,000 investment in Netflix on Aug. 7, 2009, would be worth more than $47,000 as of Aug. 7, 2019, for a total return of over 4,600%.
If you put $1,000 in Disney over the same period, your investment would be worth about $5,800, for a total return of over 480%. By comparison, a $1,000 investment in the S&P 500 would have earned a total return of 250%.
The difference between the two investments comes to more than $40,000.
On Tuesday, Disney's stock dropped in extended trading after the company reported weaker-than-expected profit for its fiscal third quarter. Disney pointed to its merger with Fox, weak theme park attendance and streaming costs as reasons for its performance.
While Netflix would have made you more money, any individual stock can over- or underperform and past returns do not predict future results. In July, Netflix shares fell more than 10% after the company said in its second-quarter earnings report that it lost more than 100,000 subscribers in the U.S., as opposed to its projected 300,000 gain.
CNBC: Disney stock as of August 7, 2019.
The new version of Disney+ allows U.S. customers to get Disney+, ESPN+ and ad-supported Hulu for $12.99 a month, but it isn't available until mid-November.. Including ESPN+ in the Disney+ bundle is one way Disney is trying to increase interest in the sports network. When purchased separately, ESPN+ costs $4.99 per month and ad-supported Hulu costs $5.99 per month.
While this new bundle isn't expected to steal users from Netflix, it is possible that it will prevent Netflix from raising its prices.
If you don't want the bundle offer, the stand-alone Disney+ also launches in mid-November. It will cost $6.99 a month, or $69.99 a year, and allow users to stream much-loved material from its archives as well as original content hooked to the Pixar, Marvel and "Star Wars" universes. This is a cheaper option than both the Disney+ bundle and the Netflix standard plan, which each cost $12.99 per month.
Bob Iger, Disney's chairman and chief executive officer, told CNBC in April that he was "optimistic" about the streaming service "because of the content, the user interface and the price."
Jim Cramer, host of CNBC's "Mad Money," is also excited about Disney based on Disney+. "It's a reasonable price. You have an unbelievable library. We have all bought these," he said. "I've bought every single property of Disney. [For] my kids, it just was kind of a rite of passage."
Not everyone is sold on Disney's plan, though. When the company first announced the Disney+ platform in April, some analysts said that Disney's goals are too lofty and that it will be difficult for its streaming service to disrupt major players like Amazon, Apple and, most notably, Netflix.
CNBC: Netflix stock as of August 7, 2019.
"We do not view Disney+ as a strong alternative to Netflix," Matthew Thornton, a tech analyst at bank holding company Suntrust, said in a note. "Disney+ features family content, while Netflix offers a much broader range of content with the majority of the most-searched content on the platform."
J.P. Morgan analyst Doug Anmuth agreed, saying in a note that "while we expect Disney+ will likely be the most competitive streaming offering to Netflix, we still do not view it as a major threat to Netflix subscriber numbers given Netflix's quality & quantity of content."
Netflix has more than 151 million total subscribers as of this month, and some analysts predict that number will grow to 335 million by 2028. By comparison, Disney+ expects to reach 60 million to 90 million subscribers by 2024.
If you want to get into the market, seasoned investors such as Warren Buffett suggest you start with index funds, which hold every stock in an index, so they're automatically diversified and tend to be low cost. Plus, because they fluctuate with the market, they're typically less risky than picking individual stocks.
Here's a snapshot of how the markets look now.
This is an updated version of a previously published article.
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