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Disney is coming after Netflix hard

Disney is coming after Netflix hard

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Disney (DIS) is up huge today (and nearing an all-time high) the morning after holding their investor day, where they unveiled not only a ton of information about their upcoming streaming services, but also new content that they are producing for those services. There had already been a plethora of rumors surrounding much of the new content, so there weren’t a ton of surprises there, but Disney still had a number of notable announcements:

  • The price point for Disney+ will be $6.99 a month or $69.99 for a year (which works out to $5.83 a month). Consider the price of a Netflix subscription is almost twice that amount and the incredible amount of quality new and old content that will be available, that’s a very tempting value. Disney is clearly serious about catching up to Netflix in subscriber count as fast as possible.
  • The service will launch (in the US, at least) on November 12th of this year. That’s probably a little later than some had hoped, but it still allows them to get ahead of the holidays. I wonder how many Christmas gifts this year will include a subscription to Disney+?
  • They’re expecting to ramp up to the mid-$2 billion in content spend a year on the service. That’s a huge commitment that shows they’re serious about challenging Netflix for the streaming crown.
  • Although it was mentioned that Disney+ will be focused on “family programming”, it’s hard for me to envision who won’t be able to find compelling content in the lineup. In addition to all the expected children’s content like the Disney animated movies, Disney+ will also have content appealing to adults like 30 years of Simpsons episodes, Pixar movies, Star Wars movies, and Marvel movies (and new TV shows).
  • They are also considering offering a discounted bundle of Disney+, ESPN+, and Hulu. That could expedite Disney’s attempts to buy the remaining ownership stakes from AT&T (T) and Comcast (CMCSA).
  • They’re projecting to have between 60 million and 90 million subscribers within 5 years, and for roughly two thirds of them being international. Honestly, those numbers seem on the conservative side to me considering the huge amount of quality content they’re offering at such an affordable price point. They’re also projecting Disney+ will be profitable by 2024.
  • Speaking of international users, there seems to be a huge opportunity for Disney there, and they made a note of expanding their streaming services quickly to Europe, Asia, and Latin America. Disney also acquired Hotstar (an Indian streaming service) in their Fox deal, which has 300 million active users per month, which is roughly twice what Netflix has.

Disney is pretty clearly putting a lot of effort into this initiative, and considering the incredible array of new and old content that they can offer and the very reasonable price that they would be charging, it’s hard to see how this isn’t a success. If there was one disappointment from the presentation, it’s that the succession plan for who becomes CEO after Bob Iger steps down in 2021 is still murky. I know there’s some very good concerns over the amount of money that he makes as CEO, but he has proven to be invaluable in leading Disney into the future with his transformative deals to acquire Pixar, Marvel, LucasFilm, and now Fox. Considering all the talk about how these streaming services will look 5 years down the line, it’s a little unsettling to know that Iger won’t be there to see his vision cross the finish line, and to not know who will be the one steering the ship across it. Just a few years ago, I remember wondering if Disney should acquire Netflix for their incredible distribution network and for them to groom Netflix CEO Reed Hastings as the successor to Bob Iger. That’s obviously off the table now for any number of reasons.

Regardless of succession, the future seems incredibly bright for Disney, and I’m glad the market seems to have finally started to catch on today. Really looking forward to the competition between Netflix and Disney (both big holdings in the Freedom Portfolio) going forward. I think there’s room in the streaming market for both companies to thrive, but the biggest winner just might be us the consumer.

Is Disney+ Overshadowing Galaxy’s Edge?

Is Disney+ Overshadowing Galaxy’s Edge?

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There were two interesting pieces of news for Disney (DIS) this week. The first was that Disney is supposedly in talks with AT&T (T) to buy out the latter’s 10% stake in Hulu. Disney currently owns 30% of Hulu, and once the Fox acquisition goes through, will own another 30%, giving them 60% total. Comcast (CMCSA) owns the remaining 30% of Hulu. Getting another 10% of Hulu when they are already on track to own a majority might not seem like a huge deal, but I believe it shows that Disney is serious about building up Hulu as a contender in the streaming video wars. With the announcement of Disney+ and ESPN+, there was some question as to what would become of Hulu under Disney’s control. If these rumors are true and Disney is seeking out more ownership, it should put to rest any idea that Disney is willing to let Hulu wither on the vine and die.

Imagine this caption is the Fry “Shut up and take my money” meme

However, I think the more interesting news is the first look that we’re getting today on the new Galaxy’s Edge expansion to their parks coming later in the year. It sounds like the reaction so far has been pretty positive.

“Magnificent” isn’t strong enough. “Awe-inspiring” doesn’t come close. It’s just…perfect.

We’ve Been to Star Wars: Galaxy’s Edge and Life Will Never Be the Same by Germain Lussier

It got me thinking about how, with all of this talk about Disney pulling their shows and movies from Netflix (NFLX) and starting their own streaming services, maybe we’re overlooking another big story. When people think of Disney, they probably think of the gobs of money that movies like Frozen and The Incredibles and Star Wars and Avengers make. While that’s true, it’s not the biggest money maker for the company. In 2018, despite the banner year which saw huge box office success for movies like Black Panther and Avengers: Infinity War and The Incredibles 2, the Studio Entertainment division of Disney still had less than half the revenue of the Parks and Resorts segment.

Yes, the Media Networks segment (which includes things like ESPN and ABC) is still the big story, both in terms of the revenue/income generated and the challenges that segment is facing due to cord cutting. Yes, a lot is riding on these new streaming services to eventually replace the revenue lost there. However, I wonder if this seemingly singular focus on Disney+ and EPSN+ and the future of Hulu is distracting from the big opportunity Disney is working on seizing in their also sizable Parks and Resorts segment.

My family is planning a trip to Disney World this year (the first for my daughters) and planning the trip has really driven home just how popular the Disney parks are and how much pricing power they have. Throw Star Wars into the mix, along with all of the nostalgia and crazed fandom that adults have for the franchise, and I really like the chances for this already huge revenue generator to keep on growing, regardless of how the streaming services do.