Wall Street May Be Underestimating Disney’s Streaming Opportunities
As Disney continues to look for ways to streamline its organization and reduce its debt load, all eyes have been on the company’s streaming service.
While Hollywood as a whole has been looking for ways to make streaming profitable, Disney is in perhaps the most precarious situation.
With legacy television revenues drying up, and three streaming services of their own, Disney’s future is tied heavily to the future of the industry.
Wall Street Is Down On Streaming
This reliance on streaming, and the lack of profitability that the industry has so far produced, has led many Wall Street insiders to shy away from Disney.
According to one analyst however, the market may be overlooking the hidden value of Disney’s stock.
SVB MoffetNathanson’s Michael Nathanson said Tuesday that while Disney’s “stock price, weak subscriber data, and the recent inconsistent management comments about their streaming strategy”, the company’s bundling strategy could still yield results.
“Given our historical doubts about these streaming business models, we completely understand why investors have soured on the streaming opportunity,” Nathanson wrote in a note to clients. “Yet, we think there is a much better opportunity here than meets the eye.”
Disney Bundles Are Working
Over the past year, Disney has managed to increase subscribers to its streaming bundles, which combine subscriptions to Disney+, Hulu, and ESPN+, even as subscribers to individual services have declined.
In Nathanson’s view, a bundle, ““will deliver enough premium content to reduce churn, aggregate engagement, and generate substantial non-programming cost savings.”
His analysis of third-party data suggests that “clear that the stability over the past year in subscribers has come from additional bundled subscriber growth of the three-service bundle (D+, Hulu, and ESPN+) and more modestly two-service bundle (D+ and Hulu) helping offset the decline in standalone services, especially since the price hikes at the end of last year.”
The Future Of ESPN
While Disney has previously announced that they will be combining Hulu and Disney+ into a “one-app” experience, the company is reportedly thinking about continuing to turn its flagship ESPN into a stand-alone streaming product.
Nathanson notes that “a sports-only streaming app is a tough model”.
Although the future of streaming remains murky, it seems that Disney has a profitable path forward, and one that Wall Street has yet to fully appreciate.
Thanks for visiting MickeyBlog.com! Want to go to Disney? For a FREE quote on your next Disney vacation, please fill out the form below, and one of the agents from MickeyTravels, a Diamond Level Authorized Disney Vacation Planner, will be in touch soon!