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Disney+ Poised to Rake In 24M Subs by 2023 – Forecast

Jeff Baumgartner
4/2/2019

With an influx of OTT-delivered subscription VOD services on the horizon from some major players set to arrive later this year, the debate about who will win the race -- or at least stay in the front of the pack -- is in full swing.

Much will be revealed about Disney+ at the company's investor day on April 11. But one top analyst already believes that this new service is well positioned to take on Netflix, as well as outdo other SVoD services on the way from WarnerMedia, NBCU and even Apple.

Before we dive into the content strategy that will fuel Disney+, MoffettNathanson's Michael Nathanson forecast in a new report on the SVoD sector that The Mouse's new service is poised to rake in 7.1 million subscribers in its first year, and grow to almost 24 million by the end of 2022. And he called those totals "conservative," given the power of the combined Disney/Fox library that will underpin Disney+.

While that still leaves Disney+ with lots of ground to gain if it's to catch Netflix (which ended 2018 with 139 million subs worldwide), that's a steep growth ramp, if the forecast holds up. The analyst also holds that Disney+, which will feature content from the acquisition of Fox, puts the service in great position to run the Netflix playbook using a massive content vault comprised of big movies, library content, off-network serialized TV shows and an array of "sizzle-worthy" originals.

Among the three major SVoD services slated to launch in 2019 -- Disney+, Apple TV+ and a set of services from AT&T's WarnerMedia -- "[W]e think that only one, Disney+, is ready for primetime," Nathanson explained.

Of note, some 47% of the combined domestic box office of the top 100 films of all time are with Disney/Fox, more than double the next-highest studio, Warner Bros. Disney and Fox also have the greatest number of the top 100 TV shows, at 19, according to IMDB, Nathanson noted.

That content combo also fits well with a recent survey from Nielsen finding that 57% said a variety of content was the most important attribute for a streaming service, while 52% cited access to movies.

While Nathanson questions why Disney doesn't come out of the gate with an SVoD offering that ties in Hulu, he argues that Disney+ "is the only one that has the aggregate clout in film and TV libraries, simplicity of offerings and brand strength to scale in the mid-term."

He likewise believes that WarnerMedia is "ignoring the brand strength and built-in subscriber base of HBO" for its coming set of SVoD services, and notes that NBCU is more focused on a direct-to-consumer OTT model that is going to lean partly on targeted advertising. And though Apple TV+ has some huge names involved, the service isn't focused on catalog content, forcing Apple to spend heavily on originals to attract customers, he added.

"These companies [WarnerMedia and NBCU] have the libraries, but they seem incapable of understanding how to use them," he explained, wondering why WarnerMedia, for example, didn't try to bundle popular library TV properties like Friends with HBO Go and HBO exclusively rather than dilute its offerings by letting Netflix keep it on its service (for a reported $100 million).

And despite the anticipated strength of Disney+, the hole in that strategy, at least near-term, is that it won't have more to do with Hulu, at least at the start. "By segmenting Hulu into an adult service and Disney+ into a family product, we worry that penetration will be sub-optimal," Nathanson concluded.

But that penetration will still be plenty optimal for Disney+ to get off the blocks and get ahead of the other new players and, perhaps, take a real run at Netflix.

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— Jeff Baumgartner, Senior Editor, Light Reading

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