Consumers, Wall Street Give Disney Thumbs Up on $7 Monthly SVOD Plans
Disney shares closed 12 percent higher at $130.06 Friday following its Thursday investor day event outlining plans for its direct-to-consumer (DTC) businesses, including the $69 annual Disney Plus over-the-top video service scheduled for U.S. launch Nov. 12. Disney expects Disney Plus to be profitable by FY 2024 on a 60 million-90 million subscriber count, said Chief Financial Officer Christine McCarthy. Analysts were generally upbeat Friday.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
The company set a high bar for expectations for the long-awaited Disney Plus announcement and “rose to the challenge,” MoffettNathanson's Michael Nathanson wrote investors. The $6.99 monthly price brought a “collective gasp” from attendees, he said, noting an “impressive slate” of new content and catalog titles for the platform that “looks like a bargain compared to other entertainment options.”
Robert Routh of FBN Securities contrasted the Disney Plus price with that of other SVOD services, noting in the future Disney will be the only service having a low-cost and family-friendly streaming service carrying “priceless content" from Marvel, Pixar, Lucas Films (Star Wars), and the "storied Disney Vault.” That should bring in “a ton of subscribers” at launch, he said.
Competing service pricing includes Google’s YouTube TV with more than 70 channels for $50 per month with OWN and Epix available for a premium; Amazon Prime Video that’s baked into the Prime membership; T-Mobile’s TVision with 150 channels for $100 monthly (plus a $10 hardware fee); AT&T’s HBO Now, $50; Dish Network’s SlingTV at $15; Sony’s PlayStation Vue, $45; Apple’s upcoming, as-yet-unpriced service; Hulu, $6 per month with commercials, $12 without; and Hulu Live, $44, said Routh. “Disney should do quite well operationally and financially.”
The $7 Disney Plus -- starting out of the gate with 25 episodic series, 10-plus original movies and series, 7,500 past episodes, 100 recent and 400 library movie titles -- undercuts Netflix’s basic subscription price by $2 and its $13 standard and $16 premium plans. Disney Plus subscribers can access their accounts on connected TV devices -- including gaming consoles, streaming media players and smart TVs -- and mobile devices. Content will “adjust to the best possible high definition viewing experience based on a subscriber’s available bandwidth,” it said, with support for up to 4K HDR video playback. Subscribers will have access to “an unprecedented amount of content for offline viewing,” it said. The company plans to offer a bundle combining Hulu, Disney Plus and ESPN Plus SVOD services, it said.
Disney Plus will be the exclusive streaming source for films released by Disney Studios this year and beyond, including Captain Marvel, Avengers: Endgame, Aladdin, Toy Story 4, The Lion King, Frozen 2 and Star Wars: Episode IX. It has library offerings from its Disney, Pixar, Star Wars, Marvel Studios and National Geographic portfolio, as well as The Simpsons and 20th Century Fox Titles The Sound of Music, The Princess Bride and Malcolm in the Middle.
Following the U.S debut, Disney Plus will expand “rapidly” to international markets, with a target of reaching all major regions of the world within two years, said the company. Long term, Disney expects two-thirds of subscribers to come from international markets.
Twitter users showed enthusiasm Thursday, with some seeing it as an opportunity to leave their cable provider. @RebelHeart311 tweeted: “I can’t wait!!! Goodbye cable and Netflix!” @DisneyRay1 said he’s not leaving Netflix “but definitely adding Disney+ to my Roku...day 1." @Jonathanest_96 narrowed his future list of entertainment subscriptions to three on the Disney Plus news: “I’m only getting Netflix, Disney+, and AMC Stubs A list.”
Some were skeptical the price holds. “Wow, shocked with how cheap Disney Plus is. Thought it was going to be 15.00. No way it stays at 6.99,” tweeted @KristianHarloff.
For @Doctor Cupcakes, Disney topped Netflix on accessibility, too: “Disney Plus is gonna be on the Switch! Surely Netflix will acknowledge the demand for an app now too,” he said, referencing the Nintendo Switch platform.
Citi's Jason Bazinet cited “aggressive” subscription targets across Disney Plus, Hulu (40 million-60 million) and ESPN Plus (8 million-12 million) by 2024, in Thursday evening's report to investors. He said the parent company assuaged analyst fears it wouldn't invest heavily in the DTC business. The company provided “a path to profitability” in the DTC segment by FY 2024.