When Walt Disney Co. (NYSE: DIS) reported fourth-quarter results earlier this week, CEO Robert Iger said that the company’s Disney+ streaming service had gotten a total of 26.5 million subscribers by the end of December. As of this past Monday, that total had grown to 28.6 million.
On the Tuesday conference call, Iger added a few details. About half of the 26.5 million subscribers signed up directly at the Disney+ website. Another 20% came from Verizon Communications Inc. (NYSE: VZ) customers who took advantage of Verizon’s offer of a free one-year subscription to Disney+. The remaining 30% came from Apple Inc. (NASDAQ: AAPL) and other services making free trial offers of up to one year.
Market research firm Piplsay surveyed more than 63,000 Americans over 18 years to find out how they liked the new Disney+ service.
Half of all Americans think that Disney+ is just as good as Netflix Inc. (NASDAQ: NFLX), and another 23% said it is even better than the industry leader.
Half of Americans between the ages of 18 and 38 have subscribed to the service and more than half of those between the ages of 39 to 53 years old said they signed up primarily for their kids. Just over half (51%) of GenZers and millennials said Disney+ is as good as Netflix, and nearly half (48%) think the Disney service is better than Amazon.com Inc.’s (NASDAQ: AMZN) Prime streaming service.
In less than three months, 37% of all Americans have subscribed to Disney+ and another 17% plan to buy a subscription soon. If those plans are executed, more than half of all Americans will have a subscription to Disney+ within a few months.
In itself, that’s a monumental achievement, but for Netflix, Amazon and other streaming services like Alphabet Inc.’s (NASDAQ: GOOGL) YouTube TV, it could turn into a nightmare. According to the Piplsay survey, nearly 40% of Americans who have subscribed to Disney+ have canceled their subscriptions to other streaming services.
The Piplsay survey indicated that Disney+ subscribers mostly watch movies on the platform, although the Disney Star Wars spinoff, The Mandalorian, has been a big hit. In addition to the Star Wars franchise, Disney’s stable of brands includes Disney (“Frozen,” among a zillion others), Marvel (Avengers films, etc.) and Pixar (e.g., “Toy Story”). A dozen Disney movies are listed among the 100 top-grossing movies of all time.
That is a very strong lineup, and it shows in average revenue per user (ARPU) for Disney+. In answer to a question on the conference call, Iger said that monthly ARPU by the end of the quarter was $5.56 on a subscription costing $6.99. That indicates that Verizon, Apple and others are paying a substantial portion of the undiscounted price.
Without being specific, Iger also commented that the “conversion from free to pay as well as the churn rates were much better than we expected they would be and much better than we had estimated they would be before we launched.”
The next push for Disney+ is getting a toehold in large international markets. Iger noted that “Netflix has done extremely well internationally.” When Disney launched the service in November, the company targeted 60 million to 90 million subscriptions worldwide by 2024 with about a third coming in the United States. The U.S. total is already within a couple million of that and, though Iger didn’t comment, the total available market of 60 million to 90 million almost certainly will be revised higher and the time to reach that level will be shortened.
The combination of unique, high-quality products, low pricing and global awareness that Disney+ brings to the streaming marketplace wil be tough to beat. Disney At this point, is it premature to wonder which service will rank second at this time next year.