Netflix, Inc.: The Mouse Strikes Back

Abstract

In 2017, Disney announced that in 2019 it would launch Disney Plus, a subscription-based streaming video service that promised to rival Netflix, the dominant player in the market. This was the latest advancement in the history of movie rentals, which had first exploded in the 1980s with the advent of videotape and had gone through several technological transformations before reaching the age of streaming in the 2010s. At the time of Disney's announcement, Netflix dominated the market due to its ever-improving algorithmic recommendation system and its investment in original content. How would Netflix withstand the competition from Disney? What would be an appropriate measure of relative strength for a streaming service? This case offers a way in to discussions of customer lifetime value, market capitalization, and discounted cash flows, as well as the role of technological change in business models and firm valuation techniques. Excerpt UVA-M-0975 Aug. 23, 2019 Netflix, Inc.: The Mouse Strikes Back Mickey Mouse had plans to join the streaming game. In 2017, the Walt Disney Company announced it would launch a competitor to online video purveyors like Netflix in the next several years. Disney Plus would be a paid subscription service offering access to all Disney and Fox Corporation content, along with new shows and movies and including 100% of the Marvel, Lucasfilm, Pixar, and National Geographic catalogues. Disney would also house its latest acquisitions, Hulu and ESPN Plus, on its new, web-based streaming platform. . . .