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DISNEY+ SUBSCRIBERS COULD BE DOUBLE THE COMPANY'S INITIAL FORECAST

By Danny Vena
08/30/19 AT 12:31 AM

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6 Things You Need To Know About Disney+, Disney’s New Streaming Service

There's little doubt that Disney's (NYSE:DIS) upcoming streaming offering --
Disney+ -- could become one of the biggest players in the industry after the
service launches on Nov. 12. There's a great deal of excitement building among
fans of the House of Mouse as more details emerge about the long-awaited
over-the-top service.

During its investor day in April, Disney estimated that between 20 million and
30 million U.S. consumers would subscribe to its streaming service by 2024,
sending the stock soaring in the wake of the company's robust forecast.

Recent research suggests, however, that the company may be significantly
underestimating demand for its direct-to-consumer service.

The happiest streaming service on Earth?


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UBS Evidence Lab -- the branch of the investment bank that tracks consumer
behavior -- recently conducted a study to measure demand for Disney's
soon-to-launch streaming service. In a survey of 1,000 U.S. residents conducted
in mid-August, 43% of those surveyed said they are "extremely likely" or
"somewhat likely" to subscribe to Disney+, which is well ahead of the company's
internal forecasts. With an estimated 128 million households in the
country, that works out to more than 54 million subscribers -- more than double
the 25 million at the midpoint of Disney's forecast.

To put that into perspective, streaming leader Netflix (NASDAQ:NFLX) -- one of
the top stocks in recent years -- has about 60 million U.S. subscribers. If the
results of this survey are accurate, Disney could be one of the top streaming
services within just a few years of its launch.

Disney+ streaming service will be the home of Disney, Star Wars and Marvel.
Photo: The Walt Disney Company

That's not all. Of the consumers who plan to subscribe to Disney+, about 57% say
they will cancel at least one other subscription service when they sign up.
Among the hardest hit would be pay-TV bundles, with 37% of intended subscribers
saying they would cancel an existing subscription. 33% said they would forego a
video-on-demand (VOD) service, and 19% said they would abandon a premium
broadcast network like HBO or Showtime.

Some other findings of the survey will help provide context. Currently, about
79% of all respondents say they have heard about Disney+, while a clear majority
of those surveyed (67%) said they would "likely" add Disney+ without eliminating
any other services.

The marketing blitz has yet to come

UBS pointed out that the survey was conducted prior to the D23 expo -- Disney's
fan convention -- which was held in Anaheim, California earlier this month. This
is important, because the company used the event to kick off its pre-launch
advertising campaign in advance of the Disney+ debut in November, and "marketing
for the service has yet to hit critical mass," according to the report.

The company sought to rally its fans by setting up kiosks that encouraged
participants to sign up early for the service. Attendees at the D23 event were
offered steep discounts in exchange for multiyear commitments to Disney+. That
strategy appeared to bear fruit, as numerous reports indicate.





Disney expects to attract between 40 million and 60 million customers from
international locales, for a total of 60 million to 90 million subscribers
worldwide over the coming five years.

Giving Netflix a run for its money

Several recent developments show just how serious Disney is about taking on
Netflix.

At D23, Disney said the monthly streaming price of $6.99 would include up to
four simultaneous streams, 4K video, ultra high definition (UHD), and high
dynamic range (HDR) picture quality -- all when available -- while offering up
to seven different user profiles. This compares with Netflix's premium pricing
plan, which allows you to stream on four devices at the same time, as well as HD
and UHD when available, for a monthly subscription price of $15.99 -- more than
twice the cost of Disney+.

Disney also recently shared some of the plans for the start of its international
rollout, which will coincide with its U.S. debut, and provided a laundry list of
devices that will support the upcoming streaming offering.

With an aggressive pricing plan, premium features, and plenty of ways to access
the service, Disney is leaving nothing to chance as it makes the quantum leap
forward into streaming.

This article originally appeared in the Motley Fool.

Danny Vena owns shares of Netflix and Walt Disney and has the following options:
long January 2021 $85 calls on Walt Disney. The Motley Fool owns shares of and
recommends Netflix and 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.

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