The Walt Disney Co.’s new entertainment streaming service Disney+ will officially launch on Nov. 12 and be priced at $6.99 per month, making the ad-free service a formidable competitor to SVOD juggernaut Netflix.
“What we are putting forward is an aggressive strategy,” Iger told the audience at the Investor Day Thursday. “We feel that if we’re going to implement it, we’ve got to be very, very serious and be all in on it.”
Disney made the announcements to analysts and the press at a nearly three-hour long Investors Day presentation in Burbank. The price point — investors can also pay $69.99 for a full year of service — was a clear indication that Disney plans to be aggressive with the service in the increasingly crowded OTT space.
Disney first announced its plans to launch the service last year. In April it launched a streaming sports service, ESPN+, which now has about 2 million customers. The entertainment service, which some analysts had jokingly dubbed “DisneyFlix” — a nod to Netflix, the global SVOD powerhouse with 150 million customers worldwide — was expected to be more attractive to consumers. Now that edge is expected to be even sharper with the low price point — Netflix raised prices for new customers in January from $10.99 per to $12.99 per month — making the Disney service a considerably cheaper alternative.
Disney+ will have a mix of movies, TV shows from its various networks and original content from its Pixar, Disney and Marvel units. The service also will be home to shows from National Geographic and 30 years of library content from its iconic animated series, The Simpsons, from its purchase of certain 21st Century Fox assets.
Disney said it expects the service to have between 60 million and 90 million global users by 2024, with about one-third of those customers in the U.S. Disney expects to spend about $1 billion on content for the service in 2020, rising to about $2.5 billion by 2024, the year that the company anticipates the service will turn its first profit.
Most analysts were encouraged by the presentation -- the subscriber guidance numbers were aggressive, as was the pricing of the service -- and Disney’s obvious enthusiasm in going deeper into the direct-to-consumer space.
“We came away encouraged by the sheer scale of the business model transformation that Disney has begun with the aim of becoming a leader in global Internet TV,” Evercore ISI media analyst Vijay Jayant wrote in a research note. “Clearly, the company has the brands, content and vision to make the strategy work – and we think the new ambitious long-term financial targets issued at the event, both on the revenue and cost sides of the equation, reflect the scope of the project now underway.”
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At credit rating service Fitch, director Patrice Cucinello said in a statement that Disney+ proves the content giant is “approaching streaming offerings with guns blazing.”
"Disney+ will be loaded on ‘Day One’ with attractive IP and franchises, and has set the price very affordably at $6.99 per month, well below other premium SVOD offerings,” Cucinello added. “Along with ESPN+, Hulu and Hotstar, an eventual bundling of Disney’s service offerings could come at a discounted price making 'cutting the cord' an attractive alternative."
But some also noted that going up against a content juggernaut like Netflix won’t be easy, especially if Disney plans to spend a fraction of the $14 billion Netflix spends annually on content.
“There are dozens of websites on the Internet dedicated to ‘what's new to watch on Netflix this week,’" Sanford Bernstein media analyst Todd Juenger wrote in a note to clients. “We don’t think there will be any websites similarly dedicated to ‘what's new to watch on Disney+ this week.’ Most weeks, there won't be anything new to mention.”
Disney+ does plan to air more than 50 original series and over 10 original movies, but even when you add in the theatrical output, that works out to one new piece of content per week, Netflix, in contrast, releases about a dozen new shows, movies and documentaries on average each week. And while Disney is an iconic brand with nearly a 100-year history of presenting quality content, Juenger wondered how much of the appeal of Disney+ will be driven by parental nostalgia and not young consumer demand.
“Of course, parents are the decision-makers so maybe that's what matters most,” Juenger wrote. “But that won't last long if they can't get their kids interested in watching (relative to YouTube, and Netflix, and Fortnite, and Instagram).”
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