How high can Disney+ go in the next two years? It has 116 million global live subscribers, and aims to reach 230 million to 260 million by the end of fiscal year 2024. But Wall Street isn’t as optimistic as it was.
Ahead of Disney’s November 10 earnings update, several analysts lowered their expectations for Disney+ subscribers. The cuts began after Disney CEO Bob Chuckle said at an investor conference in September that the company had been expecting “Low from one digit in the millionsGains in subscriber numbers in the quarter that was nearing completion; the street consensus had called about 17 million.
Factors for the slowdown include the COVID-related shutdown of the cricket league (available on Disney+ Hotstar in India), production delays and a slower-than-expected start-up in Latin America, but analysts also point to longer-term issues, including the need for a boost. Content spending. “As we know, though, we discovered that there is tremendous seasonality in this business that we might not have known before we really got into it,” Chuckle noted during an August 12 earnings call.
Stephen Cahal of Wells Fargo was among the first to cut his 2024 forecast in a report titled “Paradise Lost,” saying, “Now at the lower end of Disney+’s long-term guidance, we expect investors to question whether this is a risky bar.” It also dropped its share price target by $13 to $203 due to the subscriber’s “reset” by the company.
Kanan Venkateshwar, an analyst at Barclays, lowered his estimate for Disney+ users for 2024 even lower. The analyst also lowered its stock price target by $35 to $175 and rated it from “overweight” to “equal weight,” arguing that “Disney’s long-term broadcast guidelines may be at risk.”
Venkateshwar called the Disney+ launch “the most successful streaming launch ever”, but added: “But this year, Disney+’s growth has slowed significantly, despite the release of new franchise titles and today’s and Star+ movie releases.”
“To reach its long-term streaming sub-guide, Disney needs to at least double its current growth pace to the same level as Netflix,” Venkateshwar warned. “We think this may be difficult to do.” Netflix revealed on October 19 that it added 4.4 million new subscribers in the last quarter, for a total of 214 million globally.
Michael Morris of the Guggenheim and Michael Nathanson of Moffett Nathanson also lowered their expectations. In a recent report, Nathanson made this proposition: “Disney needs to invest in more original written public entertainment content” and also market “Disney+ in a bundle to…older families.”
In contrast, CFRA Research’s Tuna Amobi awaits, adding the subscriber’s goal, “Despite the expected quarterly slowdown in sub-growth, I am now committed to the appropriateness of long-term guidance, which seemed very conservative at first, excluding any trends or data points other than Expected “.
This story first appeared in the October 27 issue of The Hollywood Reporter. Click here to subscribe.