Stock

: Disney + has almost 87 million subscribers

Walt Disney Co. announced to investors that it has seen the future of its business – and that it is all digital devices.

The media giant
DIS,
+ 0.17%
On Thursday announced that a number of big budget films – including "Raya and the Last Dragon" in March 2021 – will debut on its burgeoning streaming service as part of a direct-to-consumer foray. In the coming years, Disney + will host 10 new Marvel series, 10 new Star Wars series, 15 animated and live-action Pixar and Disney series, and 15 Disney-Pixar films that will be rebranded as Disney + Original .

During a four-hour virtual extravaganza, Disney + was at the center of attention as the 97-year-old company weathered a national pandemic that seriously undercut its traditional businesses. Disney also rolled out growth updates to its other streaming platforms, including ESPN + and Hulu, as well as a new general entertainment offering, Star, which will be rolled out overseas in the coming months.

"All or our content will end up on Disney + at some point," said Bob Chapek, Disney chief executive, in the opening speeches, noting that Disney + had 86.8 million subscribers as of December 2nd.

Subscriber growth has exceeded original projections for fiscal 2024: In addition to Disney +’s current 86.8 million members, Hulu has 38.8 million subscribers and 11.5 million for ESPN +, according to Rebecca Campbell, Disney chairwoman at Direct -to-Consumer & International.

Investors have been very focused on what Disney had to say as the studios continued to develop their approach to film distribution. COVID-19 has forced them to delay big movies and release others through streaming services. In September, Disney introduced "Mulan" on Disney + as part of a "Premium Access" experiment that billed subscribers $ 30 for perpetual access. The latest from Pixar, "Soul", is slated to hit Disney + on Christmas Day at no additional cost.

Wells Fargo analyst Steven Cahall, who has upgraded his Disney stock rating from equilibrium to overweight, expects subscriber growth to replace earnings per share as it's the single most important metric that Disney investors are most interested in.

Like several other media analysts, Michael Nathanson of MoffettNathanson had expected aggressive direct spending to consumers in order to expand streaming subscriptions. What was unclear, he said in a December 7 note, is whether Disney would pursue a shabbier ESPN + strategy and the full financial ramifications of the company's new star service.

Read More: Disney May "Flare" Revenue To Build A Streaming Powerhouse, Says A Bullish Analyst

The media titan has moved from one crisis to another in the past year due to the COVID-19 pandemic: Disney closed theme parks and cruise lines, suspended production efforts for films and TV shows, and announced more than 30,000 layoffs. The company hobbled in its first year-end loss in more than 40 years at the end of the fiscal year – a GAAP net loss of $ 2.83 billion.

Read more: Disney suffers first annual loss in more than 40 years, but stock jumps as losses are not as bad as feared

The bleeding didn't stop there. Bob Iger has departed as chief executive, and his successor, Chapek, has overseen the downsizing at Disney theme parks and the cable sports network ESPN and redesigned senior management positions to accelerate the move to streaming.

Streaming was a bright spot for Disney. In its first year, Disney + zoomed in to 73.7 million customers, despite sheer competition from Netflix Inc.
NFLX,
+ 1.52%,
Apple Inc.
AAPL,
+ 1.20%
AppleTV +, Amazon.com Inc.
AMZN,
-0.09%
Prime Video, AT&T Inc.
T,
-2.45%
HBO Max and Comcast Corp.
CMCSA,
-1.52%
Peacock. Warner Bros. announced last week that its full list of 17 films in 2021 will be in theaters and on HBO Max simultaneously for 31 days.

For example, on September 4th, Disney unveiled its long-delayed live-action feature "Mulan" on Disney + as a pay-per-view option for $ 30.

"Every studio, every entertainment company that depends on theater revenues needs to rethink the model," Ari Lightman, professor of digital media and marketing at Carnegie Mellon University's Heinz College, told MarketWatch. "Hoping to get a two-year production like The Avengers in theaters and enjoy a billion dollar blockbuster, this model is over."

One focus, according to Lightman, is likely to be how Disney ties its streaming push to the expected return of millions of Americans to theme parks with vaccine availability in the next year. "Disney is uniquely positioned to capitalize on its consumer experience across all lines of business," he added.

Last but not least, the pandemic should also underline the vigilance with which media companies strictly protect their content exclusively via their digital platforms. Disney has removed all Marvel content from Netflix and, according to Lightman, only for Disney +.

Related Articles