Disney's (DIS - Get Report) intellectual property library is one of the entertainment giant's most valuable assets, and the company is betting that plenty of consumers will be willing to pay for streaming access to that library with its Disney+ direct to consumer (DTC) streaming service.
Disney plans to reveal details about the service, which it had previously said it expected to launch by the end of the year, at its annual Investor Day on Thursday, April 11, beginning at 5:00 p.m. ET.
- Disney is Jim Cramer's Real Money Stock of the Day
- Real Money: Place Your Bet on Disney's 'Cash Machine': It's an Experiential World After All
With its streaming service, Disney is hoping to compete with market leader Netflix (NFLX - Get Report) . , which gets significantly higher multiples for its stock on the expectation of continued rapid growth in subscribers and revenues. Disney will pull its popular Marvel and Star Wars content from Netflix once Disney+ launches.
The service will reportedly feature around 500 films and about 7,000 episodes of Disney TV. Disney also plans to produce three to four movies specifically for the streaming service as well as five original TV series.
One of the main questions investors hope to have answered Thursday is just how much Disney's service will cost.
Netflix has gradually increased its monthly subscription fee over the years, recently announcing that it was raising prices to $7.99 for its basic package, $12.99 for its standard package (its most popular plan) and $15.99 for its premium package.
Morgan Stanley analyst Benjamin Swinburne recently raised his subscriber projections for Disney+, forecasting 70 million subscribers by 2022 for Hulu, Disney+ and ESPN + combined. Swinburne cited a survey which found that 40% of U.S. adults expressed some interest in Disney+ at a hypothetical price point of $8 per month.
"With the upcoming analyst day likely to provide a needed number reset (for near-term Fox deal dilution and DTC costs), investor focus can shift to this positive catalyst path, and dreams of Netflix-like valuations for the DTC business in years to come," Cowen wrote.
As part of its media strategy, Disney should also offer some insight into its plans for the assets from former rival Fox that it recently purchased for $71 billion. The acquisition of assets including 20th Century Fox Film Corp., Fox Television Group and Fox's 30% stake in Hulu only makes Disney's IP catalog more attractive.
To get an idea just how valuable Disney's back catalog is, consider the recent success of its Marvel Cinematic Universe.
The 15 Marvel films released under Disney's umbrella since 2012 have grossed nearly $5.8 billion in the North American box office alone. Globally, the films have brought in nearly triple that amount, according to BoxOfficeMojo.
That number doesn't include the company's latest Marvel offering, Avengers: End Game, which will release later this month and is expected to be the biggest movie from the studio yet. End Game has sold five times as many advanced tickets as its predecessor, Avengers: Infinity War, and that film went on to gross $2.05 billion, making it the fourth most successful film of all time.