Legacy deals are affecting the new streamer’s catalog, but what does that mean for the company’s future in the growing streaming wars?
Jan. 9, 2020
Disney+ made its debut on November 12, 2019, and was immediately met with issues. The service was launched as a “forever home” to all of Disney’s (NYSE: DIS) vaulted classics (films released for a limited time every few years), along with all of its acquired properties (roughly 7,000 television episodes and 500 films). However, there were a few movies missing.
Due to legacy deals with other streamers like Netflix (NASDAQ: NFLX), Disney+ won’t be able to stream a few of its own titles for some time, including ‘Black Panther’, ‘Avengers: Infinity War’ and ‘Solo’. These movies won’t be on the service until later in 2020. However, thanks to a stipulation in the Disney-Netflix deal, movies released between January 2016 and December 2018 will return to Netflix in 2026 and be removed from Disney+, but this has not slowed the company down.
On day one, Disney+ got 10 million subscribers and before November ended, Disney+ secured 24 million more subscriptions. The same report also said that by the end of 2019, roughly 1.1 million US Netflix customers canceled for Disney+. Sensor Tower, in its report on mobile apps in Q4, shows that Disney+ became the top downloaded app in the U.S., even though it was launched mid-quarter.
These subscription numbers will be important in Disney’s stock valuation. Bernie McTernan, a Rosenblatt Securities analyst, says, “Frankly, [the subscriber number] is going to be the most important metric for the foreseeable future.” The Disney suite of streaming services (the recently launched Disney+ as well as Hulu and ESPN+) is being valued by the stock market at more than $108 billion.
Disney is a media behemoth. The company has acquired Lucasfilm, Marvel, 20th Century Fox (which in turn owns National Geographic), ESPN, and Hulu (majority stake). Content is king in the streaming wars and although Disney+ currently doesn’t have as much content as Netflix or Amazon Prime (NASDAQ: AMZN), what it does have is quality, thanks to their acquisitions of iconic franchises. So important is content for Disney that it has foregone $150 million in content licensing revenue in 2019 in preparation for Disney+’s launch.
Disney, as a brand, is synonymous with youth. When I asked my friends and relatives why they joined Disney+, they all explained with one word: kids. According to a recent study from GlobalWebIndex, 42% of consumers would sign up for Disney+ because the content reminded them of their childhood.
The title glitch doesn’t seem to be hindering Disney+’s growth. Disney CFO, Christine McCarthy, expects 60 to 90 million worldwide subscribers by the end of the fiscal year 2024. That’s more than the 28 million U.S. members that Hulu currently has and in line with the 83 million that Netflix had within five years of offering streaming videos. $1 billion will be spent on original programming in 2020 and it will rise to $2.4 billion by 2024.
Customers seem to be satisfied with the service as well. A comparison with other streaming services yields positive results:
|Amazon Prime Video||66%|
Ease of Use
|Amazon Prime Video||68%|
Length of Use (compared to other services)
|Amazon Prime Video||7.8% longer|
It doesn’t look like this minor content issue has negatively affected Disney+. It continues to perform incredibly well, earning more revenue in the U.S. in December than AT&T-owned (NYSE: T) HBO NOW’s best month, according to Sensor Tower.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in Disney. Read our full disclosure policy here.