Disney+ interest in the U.S. could exceed expectations: analyst

Disney already set lofty subscriber growth targets for its upcoming Disney+ streaming service, but another industry analyst feels that initial demand may surpass those projections.

UBS analyst John Hodulik cited data from the latest UBS Evidence Lab Media Consumption survey (which ran in April and May 2019) that shows 43% of respondents were interested in subscribing to Disney+. UBS said this compares to Disney guidance for 20 million to 30 million U.S. subscribers by 2024, or approximately 20% to 30% penetration of U.S. broadband households.

“We view this as a strong result, considering Disney+ will not launch until November and marketing for the service has yet to hit critical mass,” Hodulik wrote in a research note. UBS said that interest in Disney+ was highest for younger demos and higher income households.

In April, Disney held an investor day to reveal details about Disney+, which will be priced at $6.99 per month when it launches on Nov. 12. The company said Disney+ will grow to between 60 million and 90 million subscribers and become profitable by 2024.

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With so many new high-profile streaming service launches coming in the next calendar year (WarnerMedia, Apple, NBCUniversal, Quibi), UBS’s survey also asked consumers about how many subscription video services they’re willing to pay for. The firm said that typically respondents said the number of services they were willing to pay for matched the number of services consumers already pay for. Approximately 50% of respondents said they would pay for only one service, approximately 40% said they would pay for two to three, and only about 10% said they would pay for more than four.

UBS said this suggests consumers are still only willing to pay for a few video services and could look to drop existing services before adding others, which the company said is more likely to impact new entrants rather than entrenched SVODs like Amazon Prime Video, Hulu and Netflix.

“This would result in only a handful of winners in the OTT video space (including those with must have content/originals) and an even larger number of losers over time,” wrote Hodulik. “We view Disney as well positioned to be one of the winners given Hulu's current scale (28 million subscribers and growing rapidly) and the differentiated content offering of Disney+.”