Disney (DIS) announced aggressive plans to boost its Disney+ streaming service, and the number of subscribers may soon eclipse Netflix’s (NLFX) tally. Disney stock jumped.
At an investor day late Thursday, CEO Bob Chapek said Disney+ subscribers were at 86.8 million as of Dec. 2. That’s up from 73.7 million in early October and 60.5 million in early August.
Including Disney+, Hotstar, Hulu and ESPN+, the company’s streaming services have more than 137 million subscribers. In 2021, Disney+ will expand to Eastern Europe, South Korea, Hong Kong and other markets.
The company now expects to have 230 million-260 million Disney+ subscribers by 2024, up from its prior estimate of 60 million-90 million for the same time frame, with global subscriptions across all services reaching 300 million-350 million. By comparison, Netflix (NFLX) has 195.15 million subscribers.
CFO Christine McCarthy said she expects Disney+ to achieve profitability by fiscal 2024. That’s despite plans to spend $8 billion-$9 billion on Disney+ alone by then, and $14 billion-$16 billion on global direct-to-consumer content.
Offsetting some of those expenses with be higher Disney+ monthly fees, which will go up by $1 to $7.99 in March. In Europe, it will go up 2 euros to 8.99 euros a month.
Bank of America analyst Jessica Reif Ehrlich maintained her buy rating on Disney stock and raised its price target to 192 from 166.
“Despite near term COVID pressures, we believe DIS is positioned to grow stronger from faster Disney+/Hulu/ESPN+ sub growth, launch of a Star Intl. and long-term theme park margin potential,” she wrote in a note.
Key catalysts include price increases for its streaming services and the eventual reopening of theme parks and movie theaters, she added.
Dozens Of New Streaming Shows
Disney’s goal is to consistently launch 100 or more titles a year, Chapek said. Over the next few years, roughly 10 Marvel series, 10 Star Wars series, as well as 15 live-action, Disney Animation, and Pixar shows will be released directly on Disney+.
In addition, 15 live-action, Disney Animation, and Pixar feature films will be released on the streaming service as well. Disney will also release the animated film “Raya and the Last Dragon” simultaneously in theaters and on Disney+ Premier Access, which requires additional payment, on March 5.
Disney will also launch Star as a sixth brand within Disney+ in some markets, such as Europe, Canada and New Zealand. It will join the Disney, Pixar, Star Wars, Marvel and National Geographic brands but will feature edgier content from properties like FX and 21st Century. It starts to roll out in February. But in markets like Latin America, Star will launch as a stand-alone app and debut in June.
In the U.S., Hulu will premier original films from 20th Century Studios and Searchlight. Meanwhile, ESPN+ will become available via Hulu as a paid add-on early next year.
Also at the investor day, ESPN announced it has reached a deal with the NCAA’s Southeastern Conference to air football games beginning in the 2024 season. ESPN+ will also launch a morning recap show and an exclusive show with commentator Stephen A. Smith.
About 80% of the content announced yesterday is headed for Disney’s streaming services. Chapek said Covid had obviously accelerated plans to expand its DTC offerings but wouldn’t commit to a strategy post pandemic.
“We’re all about flexibility now,” and the focus is on following the consumer, he said.
“It works really well now during the pandemic,” Chapek told analysts. “It enables us not to have titles stacking up. But we’ll see if that’s a strategy going forward.”
Star Wars, Marvel Universes To Expand
Among the slate of other new shows and films, Disney announced a Kardashian reality show on Hulu. Plus a series based on the “Aliens” films is in the works with Noah Hawley and Ridley Scott as executive producers.
Meanwhile, Lucasfilm announced two new spinoff series coming in late 2021: “Rangers of the New Republic” and “Ahsoka.” The planned “Rogue One” spinoff, now called “Andor,” is coming in 2022. Plus, Hayden Christensen will play Darth Vader in the Obi-Wan Kenobi series, which stars Ewan McGregor. Lucasfilm also confirmed a Lando Calrissian series is in development and announced a “Rogue Squadron” film directed by Patty Jenkins will open Christmas 2023 as well as a new Indiana Jones movie.
Disney Animation announced Baymax!, Zootopia+, Tiana and Moana series for Disney+, among others. Pixar revealed several series for streaming, including a show based on “Cars.”
Disney studios films going to direct to Disney+ include a Pinocchio live-action film starring Tom Hanks and “Peter Pan & Wendy.” But films like a Lion King prequel and a Buzz Lightning origin story are going to theaters first. And Disney confirmed “Black Widow” still slated for theatrical release May 7, about a year after its original premiere date.
Marvel also confirmed its slate of streaming series and film releases, plus new Disney+ series featuring characters like Nick Fury and War Machine. The superhero studio also said “Black Panther 2” will come out in July 2022 but will not recast the title character originally played by Chadwick Boseman, who died earlier this year.
Disney Stock Hits New High
Shares surged 13.6% to close at 175.72 on the stock market today, more than doubling from coronavirus sell-off lows in March. That shoots past the prior all-time high of 157.46 for Disney stock reached on Wednesday, according to MarketSmith chart analysis. Netflix rose 0.4% Friday, and HBO Max parent AT&T (ATT) added 1%. Streaming rival Amazon (AMZN) rose 0.5%, and Apple (AAPL) eased 0.7%.
The event comes a week after AT&T stunned the industry by announcing the entire slate of Warner Bros.’ 2021 movies will stream on HBO Max for free to subscribers and play in theaters at the same time.
In contrast to Warner Bros., Disney will premier some big movies in theaters exclusively, while others will shift to Disney+ at no cost to subscribers and still others will require a premium to view via streaming.
Before the pandemic, Disney and other studios adhered to theatrical-release norms that gave cinemas exclusivity to show films for 75 days or more. It was an especially winning formula for Disney, which notched more top box-office blockbusters in the last five years than any other studio. That helped boost earnings and Disney stock as management shifted to take on Netflix more directly.
Disney execs have been careful to point out that they’re still in favor of theatrical releases and that releasing blockbuster movies directly to its streaming services is only a temporary strategy.
In September, it released “Mulan” on Disney+ instead of in theaters, testing a pay-per-view model when it charged subscribers an extra $30 to view it. Meanwhile, Pixar’s “Soul” will be available on Disney+ on Christmas Day, free to subscribers.
Two months ago, the company reorganized to focus more on streaming, which has been the one bright spot this year.
Direct-to-consumer revenue, including streaming, jumped 41% in the last quarter. Meanwhile, parks revenue has taken the biggest hit with many of them closed again as Covid cases rise. The segment, which accounts for more than one-fifth of revenue, sank 61%. Studio revenue dropped 52%, as theaters remain mostly closed. Media networks revenue rose 11%.
With parks closed as Covid cases rise and most movie theaters mostly shut down, Disney has laid off thousands of employees. Nearly 32,000 workers have been let go so far, most of them park employees. But last week there were media reports that more than 100 executives in Disney’s General Entertainment Content unit had also been laid off. Layoffs also hit other Disney brands, including ESPN.
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