With help from a big promotional deal with Verizon, Disney+ could wind up with about 8 million subscribers shortly after its launches on Nov. 12.
MoffettNathanson analyst Michael Nathanson pointed toward this week’s agreement with Verizon, which will have the wireless provider give a year of Disney+ to its unlimited wireless and broadband subscribers, along with Disney’s own heavy promotion, as catalysts for the service’s explosive growth.
“As a result of these offers, we estimate that Disney+ will now hit 8 million worldwide subscribers out of the gate in CY 2019 and 18 million worldwide subscribers by the end of FY 2020,” wrote Nathanson in a research note.
The growth target is based in part on estimates and assumptions regarding Verizon subscribers’ eligibility and willingness to take up the offer. MoffettNathanson said that approximately half of Verizon’s 35.3 million accounts (or 17.7 million) are eligible and that if half opt in for the product, Disney+ would get just fewer than 9 million U.S. subscribers in the first year from Verizon alone.
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That estimate is close to where UBS analyst John Hodulik landed, too. He said that the more than 17 million potential Disney+ subscribers from Verizon presents significant potential upside to his firm’s Disney+ estimates of 4 million U.S. subscribers at calendar year 2019 and around 8 million at one year after launch. Disney will be getting a lower ARPU given the likelihood that the company is giving Verizon a wholesale discount, but it will get benefits like lower acquisition costs and lower churn out of the deal.
UBS also said the Verizon deal could result in good conversion for Disney+.
“Following the 12-month promo, customers will automatically be switched to monthly billing at retail pricing. By this time, Disney+ will have a meaningful increase in content available compared to the Nov launch, incl. 35+ originals, over a year of Pay1 titles (incl. Avengers: Endgame, Aladdin, Toy Story 4, The Lion King, Frozen 2 and Star Wars IX) and potentially other reclaimed content,” wrote Hodulik in a research note.