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After months of Disney CEO Bob Iger doling out tidbits of information, investors will finally get their first look at Disney’s streaming service on Thursday.
Netflix costs for its standard HD plan. Disney has signaled that it intends for the platform to be much cheaper than its rival.
“Consumer demand for Disney-branded content is evident in its share of annual box office, and our recent AlphaWise survey data also indicates healthy levels of interest in the US for Disney product at an $8/month price point,” Morgan Stanley analyst Benjamin Swinburne said in a research note Monday.
Disney has also hinted that it is interested in bundling it with ESPN+ and Hulu, which it owns a 60% stake in. However, it’s unclear if Disney+ will coexist with these other services, particularly considering 40% of Hulu is owned by Comcast (30%) and AT&T (10%).
Disney is also entering the streaming space at a time when competition is high. Comcast, Warner Media and Apple have plans to launch their own stand-alone services.
Netflix already has around 139 million subscribers, while HBO’s subscription base is estimated to be slightly north of that number.
“We believe the Disney+ DTC service is well positioned to have an extremely strong launch that surpasses consensus subscriber expectations,” Cowen analyst Doug Creutz said wrote in a research note Tuesday. “With the upcoming analyst day likely to provide a needed number reset (for near-term Fox deal dilution and DTC costs), investor focus can shift to this positive catalyst path, and dreams of Netflix-like valuations for the DTC business in years to come.”
Disney has an incredible archive of content and a very strong box office presence. Now that it is no longer licensing its newly released films to other services, customers will have to either buy the DVD or Blu-ray release or sign up for Disney+ to see the content.
Disney also has a very appealing slate of family-friendly brands, something that most of the other services do not have. This could differentiate it from its competitors and entice families with children to purchase the subscription.
Thursday should bring more clarity for investors and the consumers eagerly awaiting the service’s release. However, Disney isn’t likely to give guidance on its earnings.
“Heading into Disney’s investor day, we are surprised at how many investors have been asking ‘do you think Disney will give guidance?,'” Bernstein analyst Todd Juenger said wrote in a report Monday. “No, we don’t.”
“While Disney doesn’t give guidance, they are adept at signaling,” he said. “We will be focused on their posture of aggressiveness.”
Most analysts have signaled that the Fox merger will have more of an impact on earnings and earning forecasts for the company than Disney+, at least in the near-term.
Disney is expected to report second-quarter earnings on May 8. Its stock, which has a market value of $210.1 billion, has gained 16 percent in the past year.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.
