By Jon Swartz
It’s far too early to pick a winner in the video-streaming war among the media world’s biggest players, but at least one analyst is placing a bet on Walt Disney Co.
Needham’s Laura Martin is sold on the aggressive pricing of the forthcoming Disney+ service ($6.99 a month) and a bundled package of Disney+, ESPN+ and Hulu for $12.99 a month. Both offerings debut Nov. 12, boasting a content lineup of Marvel superheroes, beloved Pixar characters, “Star Wars” creations, and Disney movies and TV series.
“We project DIS will win (and NFLX lose) the U.S. SVOD [subscription video on demand] battle,” Martin wrote in a Wednesday note. “U.S. consumers have shown a reluctance to add to their three SVOD services. This implies that DIS’s projected 20 million to 30 million U.S. subs [subscriptions] by 2024 will mostly come from Netflix’s 60 million U.S. subs.”
Disney /zigman2/quotes/203410047/composite DIS +2.67% announced the $12.99 package during an otherwise disappointing earnings report on Tuesday. The three-headed content monster of Disney-ESPN-Hulu, however, could further erode declining net subscriber additions for Netflix Inc. /zigman2/quotes/202353025/composite NFLX +1.95% .
Netflix also faces pressure from Apple Inc.’s /zigman2/quotes/202934861/composite AAPL +2.33% new streaming service, Apple TV+, due later this year, as well as entrants from AT&T Inc. /zigman2/quotes/203165245/composite T +0.46% and Comcast Corp. /zigman2/quotes/209472081/composite CMCSA -0.82% in 2020.
Disney has set ambitious goals for subscriptions to its service: 60 million to 90 million worldwide by fiscal 2024, most of them outside the U.S.
Morgan Stanley analyst Benjamin Swinburne is “incrementally bullish” on Disney hitting its numbers in 2020, largely because of the $12.99 bundle. In a Wednesday note, he maintained an overweight rating on Disney shares and price target of $160, which suggests a 19% upside to its closing price of $134.86 on Wednesday.