Disney (DIS) Investor Day 2020 Highlights

The Walt Disney Company (DIS) held its Investor Day 2020 after the market close on Dec. 10, 2020. Many of the key announcements involved the Disney+ streaming service, including continued strong growth in subscribers this year, bold projections for growth through 2024, a flood of new content destined for the service, and a modest price increase. 

Disney+ Subscriber Growth

Disney+ now has 86.8 million subscribers as of Dec. 2, 2020,  up from 73.7 million as of Sept. 30, 2020, the date on which Disney's fiscal year 2020 ended. In August 2020, just eight months after its debut, Disney+ had 60.5 million subscribers, close to internal projections of where it would be after five years.

Now the company is projecting that Disney+ will have between 230 million and 260 million subscribers by 2024. Disney plans to increase the monthly cost from $6.99 to $7.99, and it expects the service to reach profitability by its fiscal year 2024, which ends in September 2024. 

Disney called the recent rollout of Disney+ a success, and key launches in 2021 will be in Eastern Europe, South Korea, and Hong Kong. Back in the United States, Disney has announced a deal with Comcast Corporation (CMCSA) that will make Disney+ and ESPN+ available to many of its cable and internet customers. 

Flood of New Content for Disney+

Despite the large amount of new content coming to the service, Disney Chair Robert Iger insisted that the company focuses on "quality, not volume," and that "quality holds value." In the works for eventual release on Disney+ are 10 Marvel series; 10 Star Wars series; 15 series in total from Disney Live-Action, Disney Animation, and Pixar; and 15 films in total from Disney Live-Action, Disney Animation, and Pixar.

Additionally, new shows based on "Willow," "The Mighty Ducks," "Percy Jackson," "Cars," and "Star Wars" are upcoming. The producers of "The Mandalorian" are working on two new series called "The Rangers of the New Republic" and "Ahsoka." These are just a sampling of the new projects under development, many of them based on older Disney-owned properties.

Major Films Headed Straight For Disney+

Disney acknowledged that the upcoming live-action films "Pinocchio" and "Peter Pan and Wendy," based on older Disney animated classics, indeed will bypass theaters, going straight to Disney+ instead.  This confirms earlier unofficial reports. "Disenchanted," a sequel to "Enchanted," also is slated for release on Disney+ only. 

Theatrical Film Releases Still Planned

In the presentations, Disney indicated that traditional theatrical releases play an important role in establishing film franchises.  However, with theaters either closed or operating far below capacity due to COVID-19, this has not been a suitable environment for traditional film premieres.

As a result, Disney's planned theatrical releases have been pushed to the second half of 2021 and beyond. Among these are an Indiana Jones film slated for 2022 and a Star Wars film called "Rogue Squadron" scheduled for Christmas 2023. 

Hulu and ESPN+

Disney indicates that Hulu has 38.8 million subscribers, while Hulu+ Live TV is up to 4 million paying subscribers. Disney plans to produce original movies for Hulu, based on earlier successes, and projects that total Hulu subscribers will be between 50 million and 60 million by the end of fiscal year 2024, with profitability being achieved in fiscal 2023. Sports-oriented ESPN+ is up to 11.5 million subscribers, and Disney indicates that it is exploring a foray into sports betting. 

Significance for Investors

Disney presents the robust current growth in its streaming services, and its bold projections going forward, as a positive. However, to the extent that this growth depends on the production of costly new content, it may prove to be a negative. Investors must keep a close eye on whether Disney is on track to achieving profitability for these services on the planned timetables and, once profitability is achieved, whether it continues to rise going forward.

Moreover, COVID-19 has disrupted Disney's long-established business model for major films by eliminating theaters as part of the marketing effort and as the major source of revenue. Whether the straight-to-streaming option being pursued out of necessity by Disney proves to be positive, negative, or neutral versus the traditional distribution method remains to be seen. For example, even if major films are made available via streaming at a premium price, it is likely that multiple people can view them together at only a fraction of what they would have paid in a theater.