Disney is expected to take lot of coronavirus-related damage when it announces earnings this week but continued subscriber growth for Disney+ could be a bright spot.
MoffettNathanson predicts – based on the 50 million paid subscribers the service reported as of April 8 – that Disney+ will have 55 million paid subscribers by the end of 2020, though it warns that estimate could be very conservative. The analyst firm also raised its 2021 year-end subscriber estimate for Disney+ from 62 million to 76 million.
“We still question whether Disney+ will see elevated levels of churn as some of the earlier U.S. promotions and discounts start to roll off combined with the lack of extensive original content on the services,” wrote Michael Nathanson in a research note. “However, the international start is definitely promising and if the momentum continues our forecast will likely end up too low.”
Disney’s most recent subscriber total update for Disney+ came in April not long after the service had rolled out in eight Western European counties including the U.K., Ireland, France, Germany, Italy, Spain, Austria, and Switzerland. Disney+ also became available on April 3 in India, where it is offered in conjunction with the existing Hotstar service, which the company said already accounts for approximately 8 million of Disney+’s 50 million paid subscribers.
Despite the rapid subscriber growth for Disney+, MoffettNathanson left its predictions for losses at the service unchanged since Disney is likely to reinvest the higher revenues.
Even with direct-to-consumer services like Disney+ and Hulu taking on increased significance during the pandemic, Disney will still feel substantial negative impacts in its theme parks and studio entertainment businesses due to the coronavirus. MoffettNathanson also said that acceleration in cord cutting and ESPN’s high fixed cost base could hurt Disney’s media networks business.