Disney Jumps as Wall Street Hails Streaming Domination Plans

Walt Disney trades higher after the entertainment giant reveals plans to dominate the content streaming world, a move greeted with enthusiasm by Wall Street.
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Shares of Walt Disney  (DIS) - Get Report traded higher on Friday after the entertainment giant laid out plans to dominate consumers’ screens over the next four years through its various streaming services, an ambitious plan greeted with enthusiasm by both investors and Wall Street analysts.

Disney was up more than 13% following a four-hour-long investor day presentation on Thursday, during which Disney executives unleashed a torrent of announcements, including a slew of upcoming “Star Wars,” Marvel and Pixar series and features, and news that Disney+ had surpassed 86 million subscribers.

The company also said it expects its streaming services - Disney+, Hulu, and ESPN+ - to have a combined 350 million subscribers in four years. Disney+, which the company forecast to grow to 260 million subscribers by 2024, also will be getting a price hike, up $1 to $7.99 a month.

Disney’s message was clear: From blockbuster movies to limited made-for-TV series to sports and other entertainment, Disney-branded streaming content that will compete with the likes of Netflix  (NFLX) - Get Report, AT&T's (T) - Get Report Warner Bros.' HBO and others is on its way.

The other clear message: that Disney’s longer-term view considers peoples’ living rooms as important as the big screen. Investors, analysts and Hollywood have been watching Disney for signs of whether it too might pivot to releasing major titles on its streaming service on the same time as in cinemas, or even forgo theaters outright.

For Disney, it will be both. Blockbusters such as Marvel’s “Black Widow” will still get the big screen treatment. But others including Tom Hanks starrer “Pinocchio” and “Peter Pan and Wendy” will skip theaters in favor of a Disney+ rollout, the company said.

Still others, including “Raya and the Last Dragon,” will premiere on the streaming service for a $30 “premium access” fee on the same day it opens in movie theaters in the spring of 2021.

Analysts greeted the announcements with collective enthusiasm, with Jefferies' analysts saying the company’s investor day “topped even grand expectations,” with the subscription numbers overshadowing other reveals “because they are just that good.”

KeyBanc's research team noted that Disney’s investor day highlighted the strengths of its vast content library and global content distribution capabilities, while UBS pointed to Disney’s content spend, which it said equates to about $4 per subscriber vs. about $7 per subscriber at Netflix currently - adding that Disney is "still the best-positioned traditional media company to compete globally."

Shares of Disney were up 13.94% at $176.18.