There’s no doubt about Disney’s desire to make an impression on the market with direct-to-consumer service Disney Plus, trumpeting 10 million subscribers just a day after its Nov. 12 launch. That’s more than HBO Now’s 8 million lifetime subs, not to mention CBS All Access and Showtime OTT’s 8 million subs combined.
Wall Street sent Disney’s stock spiking to a record high on the news, and some analysts are now predicting that Disney Plus’ global reach could match Netflix’s current domestic numbers in just a few short years. As far as the streaming wars go, Disney Plus’ flashy sprint, right out of the gate, could signal an inflection point in the direct-to-consumer narrative.
The rollout itself was imperfect. Plagued — or conversely, blessed — with a throng of first-day users trying to log in and access its 7,500 television episodes and 500-plus movies, Disney Plus flashed a twee “Ralph Breaks the Internet”-inspired outage screen to many on Day One, nudging Disney to inform disgruntled consumers that demand had “exceeded our high expectations.”
Expectations were already enormous ahead of the launch. Disney Plus was largely expected to accrue about 8 million users across the seven remaining weeks in calendar 2019 — but not 10 million in one day. Wedbush analyst Daniel Ives believes that at its current pace, Disney could hit its 2024 goal of 60 million to 90 million global streaming subscribers potentially two years earlier than targeted.
That would mark admirably aggressive growth. For context, streaming market leader Netflix boasts more than 60 million subscribers in the U.S. and 158 million worldwide, a base built over the last 12 years or so. Ives’ estimates suggest Disney could get within spitting distance of a nine-figure subscriber base in just three years.
For moms and dads of wee ones, the decision to subscribe to Disney Plus is “pretty clear-cut,” wrote Cowen analyst Doug Creutz in a Nov. 13 note, calling out its $6.99 monthly price, brand recognition and marketing engine. “[T]he adoption curve is likely to be faster than any other OTT service to-date,” he asserted.
The breathlessness with which Disney Plus is being discussed is an about-face from four years ago. Recall the summer day in early August 2015, after Disney chief Bob Iger remarked on “modest sub losses” at MVP cabler ESPN, spurring a sector-wide meltdown among publicly traded entertainment media companies as investors fretted over cord-cutting and linear cable erosion.
Those concerns haven’t faded. But Iger has spent the years since then investing in the technology to create “the most important product that the company has launched,” as he put it earlier this year. That has accompanied the creation of sports streamer ESPN Plus and the assumption of full operational control of Hulu. The ascension of Disney’s stock indicates that the market cares less about further cable-subscriber losses so long as it sees promise elsewhere.
In some ways, the studio’s bet on streaming has to pay off.
Disney needs direct-to-consumer “to be a home run, as it could seriously impair [the] core pay TV business if it helps massively accelerate pay TV losses,” Pivotal media analyst Jeff Wlodarczak tells Variety.
Streaming isn’t exactly an immediately lucrative endeavor. Last week’s 10 million subscriber figure was boosted by a Verizon offer to give away Disney Plus for free to certain customers for a year, a pool of Verizon users estimated to be around 17 million strong. Plus, there’s no telling how many of the 10 million sign-ups are seven-day free trials subject to cancellations in just a week.
And whether Disney will be able to continuously report dazzling numbers remains to be seen.
“What concerns me other than the one year free, which will obviously have no churn for a year, is that with limited original content, I feel like adults will burn through the content fairly quickly and you may have quite significant subscriber churn,” Wlodarczak says.
“There are still 33 [million] households in the U.S. that have children under 13, which is a significant market,” he adds, “but I would be very cautious extrapolating these unquestionably strong initial results too aggressively.”