Familes can now sign up for Disney+, but Walt Disney ’s campaign to market the streaming service, to be available in less than two months, may not have moved the needle.
That matters because the future the company has planned, as a provider of content straight to consumers, forms the core of many investors’ upbeat views about the stock. Disney shares (ticker: DIS) have outperformed the market and other media stocks as the company revealed its streaming strategy this year.
Now it’s time to deliver. Data from UBS suggests the company has some distance to go.
Disney has set about reinventing itself in the past year, starting with a $81.2 billion move, including debt, to buy the majority of Fox’s (FOXA) entertainment assets. It paired Fox’s TV networks and film studios, including National Geographic and FX, with Disney’s ABC, ESPN, Pixar, Marvel, Star Wars, and other media properties. The deal, which closed in late March, also gave Disney a majority stake in the streaming service Hulu.
Disney revealed the next step of its transformation in April, at an investor day focused on its direct-to-consumer streaming strategy. It set ambitious targets for subscriber growth, the content on its services, and how long it will take the streaming business to turn a profit. There will be three streaming options: Disney+ for family and children’s programming, ESPN+ for sports, and Hulu, which Disney describes as targeting adult viewers.
The plan was celebrated on Wall Street. Disney shares jumped 12% the day after the announcement, and have now returned 21%, including dividends, since the start of the year. The S&P 500 has returned 21% and the Dow Jones Industrial Average has returned 18%.
So far, so good. But now a UBS survey of more than 1,000 U.S. consumers conducted in mid September showed that while awareness of Disney+ rose from a month earlier, intent to subscribe hasn’t.
A total of 71% of respondents were either very aware or somewhat aware of Disney+—up from 63% in mid August —but 42% of consumers said they were likely to subscribe, practically even with August’s 43%. Both measures were higher for younger, male consumers than for other groups.
The month-over-month comparison is meaningful because Disney began to promote Disney+ since the mid-August survey. The company revealed several shows and previews at the D23 Expo in late August.
The company didn’t immediately respond to a request for comment.
Disney CEO Bob Iger emphasized the importance of marketing Disney+ on the company’s fiscal third-quarter earnings call on Aug. 6. “Comprehensive probably is an understatement,” Iger said. “It is going to be treated as the most important product that the company has launched...certainly during my tenure in the job, which is quite a long time.”
The survey also found that nearly half of likely subscribers said that they would drop at least one other video service, such as pay TV or other streaming offerings like Netflix (NFLX) or AT&T ’s (T) HBO.
Disney+ is scheduled to be launched in the U.S. on Nov. 12. It will cost $6.99 a month, or $69.99 annually—about half the cost of Netflix. An international rollout will follow.
The average forecast among Wall Street analysts is that 4.4 million U.S. subscribers will have signed up for the service by the end of 2019. UBS sees 2.5 million as more likely.
At its April investor day, Disney said it expects to have 60 to 90 million combined domestic and international Disney+ subscribers by the end of its fiscal 2024, which ends in September. That was more than most Wall Street analysts had anticipated. Barron’s noted at the time that the targets were ambitious and that Disney risked falling short of its own projections, which could reverse the stock’s 2019 gains.
