The Walt Disney Co., best known for animated classics and family-friendly entertainment, launched a new streaming service called Disney+ on Tuesday, that will give potentially millions of cord-cutting consumers access to its trove of content.

By offering its streaming service, Disney, one of the biggest and oldest entertainment companies in the U.S., is entering the streaming wars, currently dominated by relatively young and innovative companies, such as Netflix and HBO.

While Disney+ is going up against new and existing streaming services, it is offering its content at $6.99 per month, roughly half the cost of a Netflix subscription. For that price, streamers can watch Disney, Pixar, Marvel, and National Geographic content. The platform will ultimately hold a library of 7,500 TV episodes and 500 Disney movies, plus movie franchises including Star Wars and Marvel Comics, in addition to popular TV shows such as The Simpsons.

Like other direct-to-consumer streaming platforms, Disney+ plans to make original content in 2020. With the new service, Disney is set to develop a revival of Lizzie McGuire (among others) and several new FX series, which will be found on Hulu, which it jointly owns.

A big market for streaming

Total revenue for the streaming industry was $22.6 billion in 2018, and is projected to increase to $30.6 billion by 2022, according to PricewaterhouseCoopers.

Meanwhile, Americans spend roughly $44 monthly on subscription to streaming services, according to a new Wall Street Journal-Harris Poll survey. Although Netflix is the market leader, 30% of subscribers surveyed said that they would consider leaving the service for a new one. Additionally, 47% of respondents said that they are likely to sign up for Disney+. That percentage climbed to 70% for people with children.

Source: Wall Street Journal-Harris

By the numbers

Netflix leads the pack with more than 158 million customers globally. Disney could have 130 million customers in five years, according to research from Morgan Stanley. Here’s how the rest stack up, according to Forbes:

Source: Forbes

How monthly pricing stacks up

• Netflix at $12.99
• Amazon Prime at $8.99
• Apple TV+ at $4.99
• Hulu at $5.99

Consumer deals abound

To make sure they don’t get lost in the shuffle, Disney is offering a few deals for potential customers, including an offer for Verizon customers, a bundle package with Hulu, and a free trial with Amazon Fire TV. Disney will certainly not be the last company to enter the streaming wars. In 2020, new streaming platforms from NBC and HBO are expected to further complicate the question of which streaming services are consumer must-haves. NBC’s Peacock is set to arrive in April 2020. By 2021, Netflix stand-bys The Office and Parks and Recreation will be moved to Peacock. Meanwhile, HBO’s streaming service HBO Max, which will also drop in 2020, will reclaim Friends from Netflix when it launches.

More about the competition

• HBO, owned by AT&T, spends billions of dollars annually on original content, and it has its own streaming blockbusters such as the recently concluded “Game of Thrones” series.
• Amazon Prime Video has produced 80 original TV shows, and has nearly 100 more in the pipeline, according to reports.
• Hulu currently has nearly 100 original TV shows either available now or in the works. Hulu’s other owners include Disney and Comcast. (AT&T was also an owner, but Hulu recently bought out its shares from AT&T in a deal that values the streaming service at $15 billion.)
• Apple recently launched Apple TV+, and is planning to spend $1 billion on original content, according to reports.
• Cable companies Viacom and Comcast have both launched streaming services. Even Walmart is getting in on the act with its recently acquired video platform Vudu. Facebook is also experimenting with its own on-demand video service, called Watch.

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And while Netflix has plenty of smash hits—from “Orange is the New Black” to “Stranger Things”—the so-called direct-to-consumer streaming content industry is changing rapidly, with numerous media companies eager to get in on the action, from Disney to NBCUniversal.

Why? The video streaming services industry is currently worth about $22.6 billion, an amount that’s expected to increase by about $10 billion in the next three years, according to some estimates.

What’s the future of the video streaming industry?

Here’s a quick look at how things may be changing for Netflix and others.

• Netflix user growth may be slowing temporarily. It reportedly added 2.7 million subscribers globally in its second quarter, 2019, less than half the number it added in the second quarter of 2018. But in the U.S., the company actually lost 130,000 paid subscribers in the quarter.
• In April 2019, Netflix increased its monthly subscription price by $2.00 to $12.99, which may have contributed to subscriber losses in the most recent quarter, according to company executives in earnings call.
• Netflix is also losing two of its most-watched shows—“The Office” and “Friends”, which will go to NBCUniversal and AT&T respectively. Both companies are launching their own video streaming services. “The Office” was streamed a total of 52 billion minutes in 2018, according to reports. “Friends” was the second-most-watched show on Netflix, according to the New York Times.
• The Walt Disney Co. recently announced it will enter the on-demand video race with a new streaming video service it plans to launch in November 2019, called Disney+. For $6.99 a month—roughly half the price of a Netflix subscription—customers will be able to stream Disney’s trove of movies, television shows, and other content from its Disney, Pixar, Marvel and National Geographic Studios. Disney is also pulling content from Netflix, such as its Star Wars movies.
• To come up with more shows, Netflix has increased its spending on original content at a rate that’s 50% higher than its revenue growth, according to reports.

Who are the other competitors?

• HBO, now owned by AT&T, spends billions of dollars annually on original content, and it has its own streaming blockbusters such as the recently concluded “Game of Thrones” series.
• Amazon Prime Video has produced 80 original TV shows, and has nearly 100 more in the pipeline, according to reports.
• Hulu currently has nearly 100 original TV shows either available now or in the works. Hulu’s other owners include Disney and Comcast. (AT&T was also an owner, but Hulu recently bought out its shares from AT&T in a deal that values the streaming service at $15 billion.)
• Apple recently launched Apple TV+, and is planning to spend $1 billion on original content, according to reports.
• Cable companies Viacom and Comcast have both launched streaming services. Even Walmart is getting in on the act with its recently acquired video platform Vudu. Facebook is also experimenting with its own on-demand video service, called Watch.

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The Federal Communications Commission (FCC) voted on Thursday to overturn a critical set of regulations known as net neutrality.

The debate over net neutrality–regulations that say all content that flows over broadband networks must be treated fairly and equally–has been one of the most complicated discussions happening in the public sphere and in the business world in recent months.

What happened?

The FCC is the government agency that regulates radio, telephone, TV and cable communications.

The commission’s five-person board voted 3-to-2 to overturn the regulations, which were put in place in 2015 under the Obama Administration. The commissioners voted along party lines, with a Republican majority prevailing.

“We are helping consumers and promoting competition,” Ajit Pai, the FCC’s chairman appointed by President Trump, said prior to the vote, according to the New York Times. “Broadband providers will have more incentive to build networks, especially to underserved areas.”

Those in favor of the federal guidelines say they keep down costs for consumer broadband access, while ensuring a level playing field for content providers, which range from tiny tech startups to dynamos such as Netflix.

Those opposed to the rules generally say they have throttled innovation and hamper the ability of internet service providers to invest in and grow their networks.

Next steps

Numerous consumer groups, tech companies, and Internet activists have threatened to sue the FCC to maintain existing net neutrality regulations. There has also been a push among some members of Congress to introduce legislation that would make net neutrality the official law of the land.

Nevertheless, broadband providers will have immediate discretion to begin offering new packages with new pricing schemes that could potentially favor some content over others, according to the Wall Street Journal.

Bitter divide

In a sign of how contentious the vote was, Mignon Clyborn, one of the FCC’s Democratic commissioners, had this to say, in a statement following the decision:

“I dissent from this fiercely-spun, legally-lightweight, consumer-harming, corporate-enabling Destroying Internet Freedom Order. I dissent, because I am among the millions who is outraged. Outraged, because the FCC pulls its own teeth, abdicating responsibility to protect the nation’s broadband consumers.”

Net neutrality explained

Net neutrality is a phrase coined by Columbia Law School professor Timothy Wu in 2003.

It’s the principle that says all data that flows over the internet–composed of computer networks that operate invisibly in the background every time you look at Facebook from your smartphone or watch Netflix shows from your desktop computer, for example–must be treated the same way.

The networks are operated by broadband companies often referred to as internet service providers, or ISPs, and they include companies such as AT&T, Comcast, Verizon, and Time Warner.

Net neutrality regulations said these ISPs couldn’t play favorites, for example by prioritizing their own programming by delivering it more quickly to consumers. They also couldn’t block or slow down downloads of legitimate content, even if it competed with a similar product they may have or own.

Without net neutrality, some experts have postulated the Internet could be carved into “fast lanes” and “slow lanes”, enabling network providers to simply prioritize their own programming over content from competing companies. They’d do that by potentially delivering it at faster speeds, or demanding payment for faster access to networks.

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In simple terms, cloud computing is a way of storing, accessing, and syncing data and software through the internet instead of your local computer hard drive. The ‘cloud’ is actually a global network of servers. To say those servers host massive amounts of data is an understatement.

Through web-based tools and applications, information is accessible anytime from any device with internet access and can be shared with others as you choose. Have a Gmail account? Your web-based email system is in the cloud. Share business documents with colleagues via Dropbox or Google Docs? That’s the cloud.

According to a 2016 study, the big data and business analytics industry is expected to grow 56% and become a $203 billion market by 2020.

Backup your phone’s photos and videos? Stored in the cloud. Netflix? You guessed it – they host their video content on Amazon Web Services, aka the cloud.

The cloud takes shape

The cloud isn’t only about data storage. Cloud-based applications have transformed the way we do business. Remember the days when email chains included twenty different versions of the same document, all at various stages in the editing process? As part of a whole suite of cloud-based applications, Google Docs allows users to collaborate and work simultaneously, showing real-time updates from anywhere in the world.

The cloud isn’t only about data storage. Cloud-based applications have transformed the way we do business.

Businesses that leverage big data use the cloud to capture, organize, and analyze massive data sets, something that was not possible before the cloud. According to a 2016 study, the big data and business analytics industry is expected to grow 56% and become a $203 billion market by 2020. In 2016, the banking industry led the way, investing almost $17 billion in software for risk management and fraud prevention.

Salesforce, Netflix, and Facebook don’t offer cloud services, but they rely on the cloud to provide their service to you

It takes more than just computer software companies to make the cloud possible. Sure, there are the pure play cloud computing companies that offer direct services such as network hardware and software, internet marketing and services, IT support, communications equipment, storage, and peripherals.

But there’s also non-pure players, like Salesforce, Netflix, and Facebook. They don’t offer cloud services, but they rely on the cloud to provide their service to you.

The technology behind cloud computing was first developed in the 1950s, but what we have come to know as ‘the cloud’ didn’t take shape until the turn of the 21st century when Salesforce stopped selling its software on disc and started providing their applications via the web.

If you think the best is yet to come with cloud technology, then consider an investment in an ETF on Stash that’s all about the cloud.

What’s inside On Cloud 9?

This investment (Ticker: SKYY) includes cloud computing companies – both pure play and non-pure play alike. Remember, pure play means the company actively supports and forms the cloud, and non-pure play companies utilize the cloud to provide their service.

• Tech hardware companies like Netapp and Hewlett Packard that create the systems and the equipment
• Software masters like Microsoft, Oracle, and Adobe
• Industry giants like Amazon and Apple that provide cloud storage data centers
• Companies like Google that provide industry-leading cloud-based applications
• And yes, even social media giants like Facebook and providers like Netflix who rely on the cloud to enable your binge-watching marathons.

At the time of this post, On Cloud 9 includes 33 companies. On Cloud 9 is ‘The First Trust ISE Cloud Computing Index Fund’ (SKYY) and has a 0.60% expense ratio.

Is the sky the limit?

What’s next in the world of cloud computing? More mobile capabilities, wearable technology, machine learning and AI (artificial intelligence). The Internet of Things (IoT), where machines connect to other machines and sensors, gathering data and leveraging it thanks to cloud computing, will one day revolutionize everything from smart refrigerators to smart stethoscopes to smart roads, bridges, and cars.

The cloud has the potential to touch almost everything we do – and companies of all sizes, including those that are still only an idea, will use the cloud to grow bigger, faster, and more innovative.

If you think that we’re just getting started, consider an investment in On Cloud 9.

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