Forecasts have been raised for the amount of Disney+ subscribers that Disney will get when it releases the streaming service in November after an announcement that Verizon will be offering current and future customers a year subscription for Disney+. While the subscriber count forecast has been increased, it will still be a long haul for Disney before Disney+ becomes profitable.
The Hollywood Reporter is reporting today that Disney is expected to lose billions before it generates a profit from the streaming service. In the long haul though, it is expected that Disney will begin to make a profit and then make even more. Instead of making money off of licensing rights to companies like Netflix, it will retain the profits for itself.
Michael Nathanson, an analyst from Michael Nathanson, sees the deal as a way to lose billions in the short term before rebounding and making even more in the long term.
“Rarely has a company willingly created this much financial disruption in strategically pivoting to a new business model,” Nathanson said. He noted that Disney has already lost profits from regaining control of content, buying up rights of Hulu, and also purchasing the BAMtech technology. Nathanson predicted that the move with Verizon could lead to Disney+ acquiring up to 9 million subscribers by the end of the first year. He also predicted that by the end of 2020 there could be 18 million subscribers globally.
UBS is predicting with the Verizon deal that Disney+ will have more subscribers than initially anticipated. UBS analyst John Hodulik also predicted that the partnership with Verizon reduces long term risk for Disney with the streaming venture.
Disney is predicting that by 2024 Disney+ will have somewhere between 60 million and 90 million streaming subscribers globally. Currently, there are approximately 28 million subscribers to Hulu. This also puts Disney+ within the progress that Netflix had. Netflix had 83 million subscribers within five years of dividing its streaming and DVD plans.
Disney has invested $2.6 billion to acquire streaming technology. They have also shuffled Disney executives. Disney has also given up $150 million in annual income from Netflix by cutting its output deal. Disney also invested $71.3 billion to purchase 21st Century Fox assets.