Walt Disney Co (NYSE:DIS) held a special event for investors yesterday, where it revealed details about its forthcoming Disney+ video streaming service. The company announced aggressive pricing that undercuts market leader Netflix (NASDAQ:NFLX), confirmed the service will be ad-free, and set the launch date: Nov. 12. Disney stock is up nearly 10% Friday morning.
Besides Disney’s classic movies and content from the company’s Marvel and Star Wars properties, thanks to Disney’s acquisition of Fox, Disney+ will be the only streaming service where consumers can watch The Simpsons — all 30 seasons of it.
Disney Announces Disney+ Launch Date and Pricing
On April 11 at the company’s Investor Day event, Disney revealed all the details on its highly anticipated new video streaming service.
Disney+ will launch in the U.S. on Nov. 12, with plans to eventually hit every major global market. The price will be $6.99 per month, which significantly undercuts the $8.99 monthly Netflix charges for its Basic plan, and the streaming will be ad-free. Viewers can save even more by opting for a yearly payment of $69.99, which brings the monthly rate below $6.
Even better for serious cord cutters, DIS executives confirmed the company will “likely” offer a discounted bundle of its streaming services: Disney+, ESPN+ and Hulu (which Disney now owns a controlling stake in).
Deep Library + New Programming
The company says Disney+ will feature content from all of its brands including Disney, Pixar, Marvel, Star Wars and National Geographic. With the acquisition of Fox, Disney’s video library is even deeper than before, and viewers will also find Fox content including the entire collection of The Simpsons.
In addition, at Thursday’s event there was a long list of original programming announced from virtually all of the company’s divisions — 25 original series, 10 original movies and additional documentaries and specials.
Highlights include The Mandalorian (the first live-action Star Wars series), Loki (based on Marvel’s Thor movies), The World According to Jeff Goldblum from National Geographic, Monsters at Work (a Monsters Inc. spinoff series), and The Phineas and Ferb Movie.
In all, between the Disney and Fox libraries and the new content DIS is ramping up, Disney+ is expected to feature over 7,500 TV episodes and 500 movies at launch.
Streaming Partners
For a streaming service to be successful, it needs to have hardware partners. Even if that means overlap with competitors — just look at the jostling between Netflix and Apple (NASDAQ:AAPL) to see how complicated that relationship can be.
Disney says that beside being able to watch Disney+ on a smartphone or tablet, it has inked deals with Roku (NASDAQ:ROKU) and Sony (NYSE:SNE) to support the streaming service on their hardware. Other devices are still in the negotiation stages. Although it wasn’t officially announced, Disney later confirmed to Bloomberg that Disney+ is expected to be coming to the Apple TV as well — despite being a potential competitor to Apple’s own new Apple+ video streaming service.
An Expensive Undertaking
While DIS investors are looking at the company’s streaming plans to drive up revenue and boost DIS stock, Disney+ is also an expensive venture.
Disney says that by 2024 it is hoping to hit somewhere between 60 million and 90 million subscribers, along with profitability for the service. In comparison, Netflix now has 139 million subscribers. To get there, Disney expects to spend over $1 billion on original programming in fiscal 2020, rising to $2 billion by 2024.
In addition to expenditures, there is the foregone revenue. By pulling content such as its Marvel movies from rival services, Disney is losing out on roughly $150 million in licensing revenue for fiscal 2020.
Bottom Line on Disney Stock
What was the market reaction to the Disney+ details? Disney stock itself spiked early Thursday morning in anticipation of the announcements but ended the day down by 0.45%, while Netflix stock actually gained 1% on the day. On Friday, DIS shares are trending higher by roughly 10%. With Thursday’s big reveal of pricing and release date behind us, the next thing investors will be looking at is how many subscribers sign up when the service launches. And we’ll have to wait until after Nov. 12 to learn that …
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
