While it has a long way to go to challenge the dominance of Netflix in the streaming market, Disney (NYSE: DIS) is rapidly growing its platform. Disney+, which is yet to be made available globally, now has almost 74 million subscribers.
Growth is being fueled by demand for home media during the Coronavirus Pandemic, as well as the platform’s flagship Star Wars television series, The Mandalorian.
Disney+ is helping to offset losses in other areas of the business and could force a major strategy shift in the coming years.
Fourth Quarter Subscriber Gain Impressive
Disney+ is part of the company’s Direct to Consumer unit, with CEO Bob Chapek saying on Thursday that it is “key to the future of our company.”
There are now 73.7 million paid subscribers on the platform, an increase from 57.5 million in the third quarter. To put this into perspective, consider that Netflix has 195.15 million subscribers and added 36.82 million in its most recent quarter. The more established streaming service clearly has the lead, but Disney+ is growing at a faster rate in proportion to its existing user base.
The pandemic has made Disney+ more desirable with theaters shuttered across America and throughout much of the world. The Mandalorian, an episodic television series based in the Star Wars universe is also giving the platform plenty of publicity. Now in its second season, The Mandalorian received 15 Emmy Award nominations this year.
Disney’s edge in the streaming market is its access to popular franchises. The studio owns a massive back catalog of popular animated and live-action films, many of which are among the highest-grossing of all time. This includes the Star Wars franchise, the Marvel Cinematic Universe, and properties from 20th Century Fox. While some licensed content can be found on other platforms, the company will likely avoid renewals and new licenses moving forward to keep content exclusive to Disney+.
Streaming Could Become Core to Disney’s Strategy
Home streaming could become the new cinema experience for moviegoers, and Disney is in a strong position to leverage its platform. If the recovery in cinema ticket sales is slow in the coming years, it wouldn’t be surprising to see Disney invest more in direct distribution through Disney+.
The Coronavirus Pandemic led to Disney’s first annual loss in more than 40 years, but the company has the funding and infrastructure to bounce back. With a viable Coronavirus vaccine likely to be available in 2021, the challenges of this year may soon be left behind. Disney remains a powerful entertainment stock, and with it trading far below its 52-week peak today, many investors will consider it a bargain.
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