Disney Investor Day Review: Top 10 Takeaways
The sheer tonnage of top-shelf IP on display Thursday at Disney Investor Day was all the evidence investors and fanboys alike needed that the company is more than prepared to build on the stellar year its streaming business is having.
And no better time to have it, given Disney+ has a price hike to justify and how challenged the rest of Disney is in the thick of the pandemic. Disney is moving in on Netflix fast, and if the streaming giant doesn’t build up a stronger strategy, it could lose its top spot in the streaming wars.
The stock spiked to fresh all-time highs in the after-hours trading session just eight minutes into the event after CEO Bob Chapek announced that Disney streaming service Disney+ added 13 million paid subscribers in just two months. Wow. The stock held onto its after-hours gains, crossing $160 per share.
Because there was so much new information to take in across a presentation more than four hours long, VIP boiled things down to a list of the top 10 takeaways from Disney Investor Day. Buckle up.
1. Disney+ subscriber growth blasts off
At its previous investor day in April 2019, Disney forecasted that it planned to have between 60 million and 90 million paid Disney+ subscribers by end of fiscal 2024. Disney+ is well ahead of schedule with an eye-popping 86.8 million paid subs as of Dec. 2, up from 73.7 million at the end of the company’s fiscal Q4 ended Oct. 3. Across its direct-to-consumer portfolio, Disney boasts 137 million subscribers, including 38.8 Hulu subs and 11.5 million ESPN+ subs. Sure, the pandemic accelerated growth, but this is unprecedented even when you factor in the COVID boost.
What’s remarkable about the astonishing Disney+ subscriber growth to date is it was accomplished on the backs of a pretty sparse original-content portfolio (made worse by pandemic-driven production slowdowns), led principally by “The Mandalorian.” But when you consider a Disney+ fueled to full power, not only does the prospect of Disney streaming catching up to Netflix content spend seem realistic, but even competing on subscriber count in the long term becomes plausible.
2. Revised subscriber guidance stuns
Just a little over a year into Disney+’s launch, the company upwardly revised its subscriber guidance, dramatically leaving many speechless. CFO Christine McCarthy announced that Disney now expects between 230 million and 260 million paid Disney+ subscribers by the end of fiscal 2024, up from 60 million to 90 million. Across its direct-to-consumer portfolio, Disney now predicts between 300 million and 350 million total global subscriptions by the end of fiscal 2024. Rival Netflix should be worried because those are some Netflix-like sub numbers.
3. Slew of fresh Disney originals headed to Disney+
Fresh content is hitting Disney+ exclusively, including 10 Marvel series, 10 Star Wars series, 15 Disney live action, Disney Animation and Pixar series and 15 Disney live-action, Disney Animation and Pixar features. On top of that, Hulu will launch exclusive original films produced by 20th Century Studios and Searchlight in the U.S. Phew, that’s a lot of originals. “As we increase our output, the emphasis will always be on quality, not volume,” Disney executive chairman Bob Iger said. In total, Disney announced over 100 titles, featuring 63 series and 42 films, with 84 destined for Disney+.
4. Content output of this scale isn’t cheap
After announcements of that magnitude, it made sense there would be a hefty price tag. Disney+ peak operating losses are now expected at the end of fiscal 2021; however, expectations to reach profitability in 2024 remained unchanged. Disney expects to spend $8 billion to $9 billion on Disney+ content across its five core brands, up from the previously anticipated mid-$4 billion range outlined in April 2019. And the cost is being passed onto consumers. Starting in March, prices for Disney+ in the U.S. will increase by $1, to $7.99 per month.
5. “Black Widow” follows theatrical release plan
Following weeks of speculation, Disney announced it’s standing by its plan to release Marvel film “Black Widow” exclusively in theaters May 7, 2021, despite pressure from rival studios. Disney’s decision comes after AT&T-owned WarnerMedia announced that it would be releasing its entire 2021 movie slate simultaneously on HBO Max and in theaters. Disney is just too powerful on the theatrical side of its business to need to risk diluting that with a day-and-date offer that has WarnerMedia in a lot of hot water in Hollywood right now. Other Marvel films set to be released in theaters next year include “Shang-Chi and the Legend of the Ten Rings” in July and “The Eternals” in November. All of this, of course, assumes the pandemic cooperates with the hopes it will disappear soon after vaccines hit the U.S. market.
6. Welcome to the Kingdom of Kumandra
Meanwhile, another Disney film will be released simultaneously on Disney+ and in theaters March 5, 2021 — “Raya and the Last Dragon.” The film is the latest to be released on Premier Access following the release of “Mulan” in September.
7. The world of “Star Wars” expands
The insatiable fans of the “Star Wars” franchise have had their prayers answered, as there’s so much spinoff “Mandalorian” and “Star Wars” content in the pipeline. A new film, “Rogue Squadron,” directed by “Wonder Woman” director Patty Jenkins will hit theaters Christmas 2023. Also, two new “Mandalorian” takes are also in the works: “Ahsoka” and “Rangers of the New Republic.” No better way for Disney to signal its strength than to extend its hottest series into new versions.
8. Disney widens reach with Comcast distribution deal
Disney and Comcast reached a deal to integrate Disney+ and ESPN+ into the U.S. cable company’s Xfinity X1 and Flex broadband services. The partnership gives Disney+ the opportunity to reach Comcast’s 20 million internet and cable customers. “The availability of our app on mobile and connected devices has helped to amplify our reach into more streaming households and deepen subscriber engagement,” Disney Streaming Services president Michael Paull said.
9. Here come Star and Star+
Brace yourselves for Star and Star+, which will be international general entertainment content brands. The free Star will be a fully integrated sixth tile in the Disney+ app in Europe, Canada, Australia, Singapore and New Zealand in February, then rolling out into markets including Hong Kong and South Korea later in 2021. Meanwhile in Latin America, Star+ will be a standalone app, with a planned launch of June 2021. In addition to Disney content, Star+ will also carry ESPN and ESPN+. The idea of an international Hulu-like service was first discussed in August to offset that brand’s lack of exposure outside the U.S.. Star and Star+ are the key to that initiative overseas.
10. ESPN’s megadeal with SEC
Disney has lured away from CBS what has been described as the crown jewel of sports-rights packages in college football beginning in 2024. A 10-year deal that will cost north of $300 million per year represents an astronomical 7x markup from the previous deal, which probably explains why CBS couldn’t hold on. And though experts continue to question why Disney doesn’t spin off its fading broadcast business, having a weekly ABC berth was crucial to landing the SEC deal.
After nearly four and a half hours, investors walked away from investor day confident in Disney and its newly pivoted DTC-focused business model. The stock held onto its after-hours gains, crossing $160 per share.
Seems Disney is moving in on Netflix fast, and if the streaming giant doesn’t build up a stronger strategy, it could lose its top spot in the streaming wars.
And according to Iger, there’s more to come. “We’re just getting started,” he said.