First Anniversary of Disney+ Finds Service’s Parent Grappling With Pandemic Fallout

Disney’s high-profile subscription streaming service Disney+ launched a year ago today (Nov. 12). Disney is set to report fourth-quarter financial results at the market close. With much of its businesses such as amusement parks, cruise ships, movie studio and television operations (and ad revenue) either shuttered or operating in limited capacity due to the coronavirus pandemic, streaming video is likely the only positive on what is expected to be a depressed corporate earnings call.

Disney+ had more than 60 million subscribers on the company’s last fiscal call, and CEO Bob Chapek has made it clear over-the-top video is at the core of company  going forward. Indeed, when combining Hulu and ESPN+, Disney’s SVOD subscriber base topped 100 million at the end of the previous quarter.

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The summer rollout of Disney+ Hotstar in India, which is operated by Disney subsidiary Star India, features two paid tiers: a VIP plan offering local language programs and live sports; and a Premium plan showcasing international (i.e. U.S.) movies and TV series from Disney, Showtime and HBO, among others. The service had nearly nearly 9 million subscribers in the last quarter.

“Disney+ has been the one shining star in the Disney empire in 2020,” Trip Miller, a managing partner at Gullane Capital Partners, told CNN Business. “The advent of the Disney+ platform could not have come at a better time.”

Yet, the SVOD platform is not projected to be profitable until 2024. The service could end up losing $2 billion in the just-concluded fiscal year — and even more in 2021.

“I think Disney+, and the rest of their direct-to-consumer assets like Hulu and ESPN+, are the most important units in the eyes of investors,” said analyst Michael Nathanson. “It’s a source of long-term growth and helps offset [pay-TV] cord-cutting and shifts in audience behavior.”

Nathanson, who believes ad-supported VOD is the streaming story in 2020, says Disney’s OTT platforms have the ability to expand with AVOD offerings depending on marketing conditions. Disney plans to launch an ad-supported international OTT service under the Star brand in 2021.

Indeed, growth of free ad-supported streaming TV (“FAST”) is exploding through services such as ViacomCBS’s Pluto TV, Comcast’s Xumo (and Peacock), Fox Corp.’s Tubi, The Roku Channel and IMDb TV, among others. And Disney doesn’t want to be left behind.

“They are really all in [streaming] now,” Nathanson said. “Disney has built a [OTT] lifeboat that gets them through the current storm in traditional media.”

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