With a library full of Marvel, Star Wars, and other beloved franchises, Disney is expected to be a major force in the streaming wars when it launches its own service late next year.
A new report from analysts at Morgan Stanley, led by Benjamin Swinburne, estimated the service will gain around 23 million subscribers by 2024, and between 40-45 million by 2028. Based on an expected monthly subscription price of $9 at launch, which could increase to $13 by 2028, the analysts predicted the service will be profitable in 2026.
The analysts wrote that they saw the Disney service becoming a $6-billion-plus business, “with stand-alone EBIT profitability achieved in 2026E.”
Disney would have been a formidable player in the streaming game even without the Fox merger, but the analysis was made with the assumption that the Disney-Fox deal will be completed as planned. Last week, 21st Century Fox president Peter Rice told Variety that the deal is expected to close by January 1, at which point Disney will own Fox’s film studio and other assets. That means that Disney will own Fox’s Marvel superhero properties the X-Men and Fantastic Four, as well as other franchises like “Avatar” and “Alien.”
The Morgan Stanley report noted that Disney’s service will be “more modest” in its scope of content and spending than its primary competition, Netflix. Netflix made it a goal this year to have 1,000 original shows and movies by year’s end, and spent an estimated $8 billion to do so. The analysis estimated Netflix to have 227 million subscribers by 2022 compared to the 117 million it had last year.
But that doesn’t mean that Disney isn’t dropping big bucks on the service. Morgan Stanley expects Disney to spend nearly $2 billion on content for the streaming service prior to its launch in 2019, and “could have 8-10 original TV series (including at least 2-3 high-profile series with larger budgets), 3-4 original films, as well as other original TV movies and short-form content ready to be released.”
“The service is also expected to include library content from Disney Channel and a steady pipeline of recent theatrical releases in the US following the expiration of its Netflix pay-1 deal in calendar 2018,” the analysts added.
Netflix won’t be Disney’s only competition, though. AT&T, which now owns Time Warner, announced last week that it will launch its own streaming service next year that will include HBO. Amazon is developing a pricey “Lord of the Rings” TV series, and Hulu should never be counted out with a wide-range of content that includes the Emmy-winning “The Handmaid’s Tale.”