The Disney empire strikes back at Netflix – but more rivals are set to enter the fray

Disney’s eagerly anticipated entry into the streaming wars last week proved that the days of Netflix’s virtual global monopoly are well and truly over. Backed by a stellar library of content, from the Marvel and Pixar films to the $100m live-action Star Wars series The Mandalorian, Disney+ attracted 10 million customers on day one.

A technical glitch that temporarily crashed the service failed to dissuade fans in its launch markets, the US and the Netherlands, although sign-up numbers were swollen by Disney+ being offered free to customers of Verizon mobile for a year.

Investors have been jubilant – Disney’s share price rose more than 7% on news of the launch-day take-up. The sense is that Netflix and, to a lesser extent, Amazon are facing a third superpower. The Disney service, which at $6.99 a month in the US is about half the price of Netflix’s most popular package, is well on the way to its target of between 60 million and 90 million subscribers globally by 2024.

Disney+ will arrive in Australia and New Zealand next week and in the UK on 31 March, as part of a western Europe launch. A roll-out in Asia Pacific will also begin next year, with Latin America in 2021.

The cracks may finally start to show at Netflix, which has once again upped its annual budget, to $15bn, as the inexorable need for ever-more-expensive content to win subscribers takes its toll. Netflix has more than $30bn in debt and long-term liabilities relating to the making and licensing of programmes.

Earlier this year, the need to increase its war chest saw Netflix push through the biggest price rises, up to 18%, in the company’s history. This, in the second quarter, led to its first-ever loss of subscribers in the US. Netflix is forecasting that in 2019 it will not have added as many new subscribers as it did last year, which is the first time it has failed to report year-on-year growth since its streaming service launched in 2007.

With the global launch of Apple TV+ on 1 November, priced at just $4.99 a month or free for 12 months to the 200 million people who buy a new Apple iPhone each year, and more new rivals on the way, costs continue to soar.

Ted Sarandos, Netflix’s content chief, recently admitted that the cost of winning a bid for the most “elite” of shows has risen by 30% in the past year because of competition from new entrants.

Apple was willing to pay an eye-watering $240m for two series of The Morning Show, its flagship drama starring Reece Witherspoon and Jennifer Aniston. Netflix has lost both Friends and the US version of The Office in $500m deals to HBO Max and Peacock, the streaming services from US giants WarnerMedia and NBC Universal respectively. These two are set to further crowd the global market when they launch next year. HBO Max also snapped up The Big Bang Theory, the most popular scripted show on US television, though Netflix struck back by securing Seinfeld.

Netflix remains the market leader by some distance, with 158 million global subscribers (about 11 million of them in the UK), but the era of peak streaming and consumer “subscription fatigue” seems to be approaching rapidly.

In 2007, the year Netflix switched from DVD-by-post rental to embark on its streaming future, the total amount TV companies spent on content globally was $90bn. Spending this year will reach almost $170bn, according to Ampere Analysis.

There are estimated to be almost 800 new scripted TV series in production by the main international streaming services, such as Netflix, Disney, Amazon and Apple, most of which will land over the next 12 months. It would take an average viewer four to five years to watch just these new shows, never mind older fare and unscripted content such as reality and talent shows and documentaries.

“I don’t know if I would call it a bubble but if the current growth in spending on content is sustained it will rapidly become unmanageable,” says Richard Broughton, analyst at Ampere. “I don’t think there will be enough room in the market for all the big streaming services to survive in their current forms.”

One cheer for the EU investment bank’s move out of fossil fuels

The long-awaited decision by the European Investment Bank (EIB) to end fossil-fuel financing – and Europe’s multibillion-euro hypocrisy – within the next two years was long overdue.

For decades the world’s biggest public bank has been funnelling millions of euros every day into oil, coal and gas projects, while the EU governments that own it claimed to be taking a global lead in tackling the climate crisis.

The landmark global climate agreement struck in Paris in 2016 did little to slow the flood of funding to fossil-fuel funds. A little over a year after the Paris agreement, the Luxembourg-based bank made Europe’s biggest-ever loan – for a controversial gas pipeline. It was a cool €1.5bn deal to support the Trans-Adriatic pipeline from the Caspian Sea to western Europe, which would lock countries into decades of dependence on natural gas.

Previous loans helped Italian oil major Eni to set up offshore gas rigs, and Polish utility PGE to build new gas-fired power plants.

The decision to end fossil fuel financing by 2021 makes the EIB the first major lender to take a step which is as bold as the political rhetoric on carbon emissions. It will help the EU to end its contribution to global heating, and establish the world’s first major “climate bank”, aligned with the green agenda.

However, it may still be too soon to claim that Europe’s climate hypocrisy is over. The decision to clean up the €500bn EIB was not universally accepted across the bloc, and the debate has revealed fault lines in Europe’s commitment to the Paris climate goals. Germany and the European commission – the EU’s executive arm – were identified by campaigners as blocks in the negotiations over the EIB’s new lending policy, despite being vocal supporters of the Paris accord.

In the battle against a climate crisis, the time for talk has long passed. At least now Europe is finally beginning to put its money where climate action requires it to be.

Nationalising broadband will be a tricky call

There is a growing appetite for the natural monopolies privatised by Margaret Thatcher and John Major to be taken into public ownership. And quite rightly so. Not because the targets for nationalisation are on the brink of insolvency as they so often were in the 1960s and 1970s. Or that they are starved of investment. They are not. On most financial measures they are ticking along just fine.

The appetite stems from the behaviour of the owners of Britain’s water and energy companies and railways. One by one, these industries have been loaded with debt as a means of furnishing shareholders and creditors with lavish payouts.

That debt is refinanced on a regular basis to take advantage of increasingly low interest rates – again, not to prevent sewage entering our rivers or allow new electricity connections to solar farms or lower prices on the railways, but to feather investors’ beds.

Labour’s plans to bring the UK’s broadband network into the ambit of natural monopolies poses a more difficult problem. The network needs investment in fibre-optic cables and sophisticated software at local exchanges. By Labour’s calculation, this is a £20bn project.

There is the potential for the broadband project to become a political football, with unions exercising their newfound muscle to extract higher pay and benefits. Likewise, city mayors promoting their areas could be given unwarranted priority. Most importantly, it is not an area the public sector has ever managed. Why would civil servants make good decisions about broadband networks?

If Labour can show it has thought about these issues and others – such as how its new network would build on existing ones and why it should be free to households – there could be much merit in a nationalised broadband network.