After extraordinary early interest in Disney+, the streaming video service will likely see further growth coupled with significant financial losses in 2020.
That’s according to analyst firm MoffettNathanson, which predicted Disney+ will reach 15 million subscribers in the first quarter of 2020 and grow to 25 million subscribers by the end of the year. That forecast is based in part on Disney reporting that the service had amassed 10 million sign-ups one day after its November 12 launch.
“There is real potential that we are too low for both broadcasts but would like to learn more about the churn profile for Disney+ subscribers, especially after the first season of ‘The Mandalorian,’” wrote Michael Nathanson in a research note.
The analyst firm also predicted that Disney+ will generate $2 billion in losses for its parent company.
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While it’s a sizable loss, it’s one that Disney prepared its shareholders for when it held a Disney+ investor day in April last year. The company said Disney+ would become profitable by 2024 as the company somewhat transitions away from the affiliate and licensing revenue model toward a subscription revenue model for its media business.
Disney also predicted that Disney+ would have between 60 million and 90 million subscribers worldwide by the end of 2024.
Based on Disney’s most recent 10-K filing with the SEC, MoffettNathanson also updated its estimates for ESPN+ and Hulu, the other two key components in Disney’s three-pronged streaming video strategy. The firm predicts that Hulu losses will total $1.4 billion in 2020 and that the service will reach 38 million paid subscribers by the end of the year. It expects Hulu’s losses will be mostly flat against 2019 as the company pours its advertising and subscription revenue back into the business.
For ESPN+, MoffettNathanson expects the service to benefit from being bundled with Disney+. The firm said ESPN+ will reach 12 million paid subscribers but that rising sports rights costs will stick the service with around $700 million in losses for 2020.
“Adding up all of these projected DTC losses as well as other segment losses from addressable ad sales, BAMTech services and Hotstar, we forecast FY 2020 DTC losses of -$4.5 billion, double last year’s due to a full year of Hulu consolidation in FY 2020,” Nathanson wrote.