Disney+ Could Be Even More Disruptive Than You Think

Shortly after Disney (NYSE: DIS) closed on its $71 billion acquisition of most of the assets of Twenty-First Century Fox earlier this year, the entertainment conglomerate's management made it clear the deal wouldn't have happened had those assets not been a key component of its streaming media plans.

After all, from a content standpoint, there's little doubt its upcoming Disney+ streaming service -- set to launch in November -- will be perfectly positioned as an immediate contender to capture an outsized slice of the streaming-media pie. The new service will not only feature films and TV shows from Disney's namesake studios and broadcast networks, but also from its Marvel, Pixar, Lucasfilm, ABC, National Geographic, and FX Networks. And the company has since unveiled a compelling slate of original content that will only be available on the Disney+ platform, including multiple Marvel-centric TV shows (Moon Knight, Ms. Marvel, She-Hulk), a Muppets short-form series, and several new Star Wars series (notably The Mandalorian and separate untitled shows following the Obi-Wan Kenobi and Cassian Andor characters).

In retrospect, that explains why Disney predicted late last year that Disney+ should be able to snag as many as 60 million to 90 million subscribers by the end of 2024 -- approximately equivalent to 20% to 30% of the United States' total population of around 330 million people. Disney also indicated that would be enough to help the service achieve sustained profitability, even with its attractive $6.99-per-month subscription price.

But there's reason to believe Disney+ could be even more disruptive than the House of Mouse expects.

Family sitting on the couch and watching television


According to a recent survey performed by analysts at UBS, 43% of 1,000 respondents say they are already interested in subscribing to Disney+ -- an especially surprising figure, UBS elaborated, considering Disney's "marketing for the service has yet to hit critical mass."

What's more, the survey also indicated that within that 43%, more than half (57%) suggested they would cancel one or more of their existing streaming services after Disney+ launches.

To be fair, 1,000 people is a relatively modest sample size. And it's difficult to consider the incremental impact of Disney's early promotions -- including a discounted three-year Disney+ subscription offer that helped crash Disney's D23 website earlier this week -- as well as the company's plans to bundle Disney+ with its separate Hulu and ESPN+ services for $12.99 per month. That bundle, by the way, spurred 46% of another survey's respondents to say earlier this month that they'd likely subscribe.

For perspective, if you scale those figures -- let's say between 43% and 46% -- to the broader U.S. population, that'd mean Disney+ already has between 140 million and 150 million subscribers just waiting for the entertainment giant to collect their monthly subscription dues. And that's not to mention the promise for incremental subscribers from outside the U.S.; just last week, the company confirmed Disney+ will follow shortly after its U.S. launch by rolling out in Canada, the Netherlands, Australia, and New Zealand.

It'll take some time, of course, for Disney+ to amass such totals even assuming all goes smoothly with this November's launch. But I highly doubt it'll take the full five years that Disney was previously expecting to reach subscriber figures that easily eclipse its earliest targets. And that should mean good things for both Disney and its stakeholders going forward.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has the following options: long January 2021 $60 calls on Walt Disney and short October 2019 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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