American Consequences - November 2019

Captain Marvel movie will be the first movie to stream exclusively on Disney+. And of course, Disney officially closed its $71 billion acquisition of the major entertainment assets of 21st Century Fox. That means Disney will have access to popular franchises like the X-Men, the Fantastic Four, and Avatar. The acquisition is going to make Disney’s star-loaded bench even deeper.

In 2013, the company premiered its first Netflix-produced show, the political drama House of Cards . Then it began raking in subscribers with original content like Orange Is the New Black and Stranger Things . Netflix had about 40 million paying subscribers in 2013. Disney+ is only projected to have 13 million subscribers by the end of next year (with other estimates only a few million higher). This is

If history dictates how Disney will use Fox’s content, then this acquisition makes a ton of sense. To the right are the top-10 grossing movies of all time, which Disney’s studios dominate. Morgan Stanley projects that by the end of 2020, Disney+ could have 13 million subscribers. And the company could have 50 million streaming subscribers when

All-Time Box Office Worldwide Grossing Movies

for a service that costs less than Netflix – only $6.99 a month – and with arguably more desirable original content than Netflix. Plus, folks are primed to pay for digital streaming services. Netflix was the “first mover” in streaming TV and movies. But now Disney doesn’t have to build a new industry from scratch. And just recently, it teamed up with Verizon Communications (VZ)

TITLE

STUDIO

SALES

Avengers: Endgame

Disney

$2.8B

Avatar

Fox

$2.8B $2.2B

Titanic

Paramount

Star Wars: The Force Awakens Disney

$2.1B

Avengers: Infinity War

Disney

$2.0B

Jurassic World Universal

$1.7B $1.7B $1.5B $1.5B

The Lion King Disney

The Avengers

Disney

Furious 7

Universal

Avengers: Age of Ultron Disney

accounting for its other services like Hulu and ESPN+. Morgan Stanley also projects that Disney+ could have more than 130 million subscribers by 2024. We think that’s too conservative. Disney+ will shatter those expectations. Netflix introduced its streaming service in 2007. It had about 7.5 million subscribers (including DVD subscribers). But Netflix didn’t really burst onto the scene until a couple years later.

$1.4B

to offer some its customers one free year of Disney+. That alone will bring in millions of users. The Disney+ subscriber estimates out there are far too conservative. Low expectations mean the stock should do well after investors see how many folks subscribe to Disney+. Disney's future firepower is going to be incredible... and Disney shareholders have a lot to look forward to.

American Consequences

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