Disney+ subscriber growth could be significantly higher than expected


The Disney+ streaming service could take a bigger bite of the market than expected. A new survey from UBS says 43% of respondents were “interested” in subscribing to the new service. That’s more than double Disney’s own conservative guidance and 13% more than its most hopeful take rate of 30% by 2030.

UBS said its Evidence Lab Media Consumption survey showed strong interest in Disney+ even though marketing for the service has yet to “hit critical mass.” In May, UBS posited that Disney+ could reach 10 million global subs within its first 12 months of its Nov. 12 launch. By 2024, it forecast, that number could be 65 million.

At its Disney Investor Day 2019 presentation in April, the company said it new service would cost $6.99 a month – or, an annual subscription for $69.999 a year, about $5.83 a month – less than any other popular service. Amazon is $119 a year for streaming and other benefits, and Netflix’s cheapest plan is $8.99 a month.

Despite Disney’s low price-point, breakeven for the service likely is 2024, UBS said.

In May, UBS wrote: “Management guidance for direct to consumer suggests larger near-term losses than we had anticipated, but with the path to profitability sooner than expected. We now expect the Direct to consumer international segment to reach breakeven in FY24 vs prior expectation of a $2B loss in FY24 and breakeven in FY26.”

In comparison, forecasts put Netflix subscriber numbers at 300 million or more subs by 2024.

Earlier this month, Morgan Stanley analyst Ben Swinburne also jumped on the Disney+ float, saying he also believed demand for the service is underestimated.

The bottom line

Disney is stepping into deep waters with its global OTT play, like other broadcasters globally. But with a commitment to expanding its already large content library, the Disney+ service immediately will be a competitor – despite its protestations to the contrary – with Netflix, Amazon and the rest of the world’s biggest OTT players.

The shift in the marketplace is a clear one: Consumers are showing a growing demand for streaming services of all ilk.

As Disney noted during its investor day, global D2C paid subscriptions are growing at a CAGR of 37%, expected to top 810 million globally in two years. But, more critical, is the amount of content being consumed. That’s a number growing at a CAGR of 50%. eMarketer and IHS estimates put the total hours of paid D2C video at 1.2 billion hours a day by 2020, up from 260 million in 2018 and just 20 million in 2010.

Stay tuned.

Jim O’Neill is Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn