John Royden, Head of Research
52 week high-low$153.41—$107.32
Net yield 2.24%
Hist / pros per26.80—22.51
Equity market cap$212,409
Disney makes and sells films as well as running its Parks & Resorts division. Disney also own a variety of other TV and film production businesses, including ESPN (sports), Hulu and Hotstar as well as 21st Century Fox. Film banners also include Pixar, Marvel, Touchstone and the Star Wars franchise.
The Disney film business model involves selling its films to cinemas for a few months and then digitally (on DVDs or via digital purchase). Previously, Disney used to make the films available to subscription video businesses like Netflix. Disney has stopped this final leg of the distribution chain, cancelled the Netflix contract and are now selling their content direct to consumers across the Disney+ internet or OTT (as it is now called) channel. They hope for 75 million subscribers by 2024. After the first quarter since the geographically limited launch of Disney+, they had registered 26.5 million subscribers.That level of success exceeded even Disney’s own expectations.
We are particularly interested in the outcome of Disney+ because this is the first time that an old incumbent has seriously challenged the on-line first mover advantage of one of the FAANGs. The main risk is that Disney+ doesn’t reach critical mass.