Disney is forecasting that Disney+, Hulu, and ESPN+ combined will have up to 350 million subscribers within four years, when the company could be spending $16 billion a year on content for its streaming services.
With a yugely successful first year for Disney+ in the books, the company is in the midst of reshuffling its content-production, distribution structure, and priorities to usher in its next leg of streaming growth. All of Disney’s TV and movie content will eventually land on one of its subscription services, with select releases leapfrogging the traditional windows and streaming from the jump.
Disney’s [$DIS] direct-to-consumer sector chief Rebecca Campbell informed investors on the latest subscriber totals for the company’s three-headed streaming service; at the start of December Disney+ had 86.8 million users, Hulu had 38.8 million, and ESPN+ had 11.5 million. Those are all well above management’s guidance from April 2019, which called for 60 million to 90 million Disney+ subscribers by 2024, 40 million to 60 million on Hulu, and 8 million to 12 million on ESPN+.
Disney is also planning an international entertainment-focused service called Star—similar to Hulu in the U.S. Star will be rolled out in Europe, Canada, Australia, and New Zealand in February 2021, with more markets to follow as the year progresses. In those initial markets, Star will be accessible in Disney+, rather than be a stand-alone service. What does that mean? A Disney+ price increase is on the horizon for subscribers. By June 2021, standalone Star+ will be available in Latin America, which will include live sports.
Effective immediately, Disney’s operations will be split into bipartite systems for accounting purposes, per CFO Christine McCarthy. One category will include its media and entertainment segments, and the other with its parks, merchandise, and experiences businesses. [Here’s Why Activision Blizzard is Suing Netflix]
Starting in March 2021 The price of Disney+ in the U.S. will rise by $1 a month, to $7.99. Disney intends to push the leftover revenues from its larger subscriber base into new content production. Disney is banking on Hulu to flaunt 50 million to 60 million subscribers in 2024, up 10 million from its latest prophesy. ESPN+ subscribers are believed to be 20 million to 30 million in that year, Disney now expects, versus 8 million to 12 million the last time it gave guidance.
On Thursday, Kareem Daniel, the new chief of Disney’s Media & Entertainment Distribution group, said that Disney+ will swallow up 10 Marvel, 10 Star Wars, and 30 Disney and Pixar seasons in the coming years, with something new coming to the service every week. Fresh original content is monumental to keeping streaming subscribers engaged and paying every month.
With movie theaters closed in 2020, Disney released a live-action remake of Mulan as a $30 streaming add-on to Disney+ in September, and will release Pixar’s Soul directly on the service on Christmas Day. Both had initially been set to stream only months after their theatrical debuts. In March 2021, Disney’s Raya and The Last Dragon will be simultaneously released as a paid add on to Disney+ and in theaters.
Speaking to analysts after the investor day on Thursday, CEO Bob Chapek said that the Disney would be “nimble” in the future, calling its historical box office revenues “nothing to sneeze at.” Disney stock is up 7% since the start of the year. Media peers Viacom CBS [$VIAC], Fox Corp. [$FOXA], and Discovery [$DSCA] are all down at least 10% this year. Shares of streaming giant Netflix [$NFLX] meanwhile, have soared more than 50% year to date. The S&P 500 [$SPY] has returned 16% including dividends in 2020, and the Dow Jones Industrial Average [$DJX] has returned about 8%.