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Verizon and More: Why the Disney Plus Launch was a Jaw-Dropping Success

Last Updated September 23, 2020 1:16 PM
Sam Spencer
Last Updated September 23, 2020 1:16 PM
  • Disney’s stock surged to record highs following the launch of Disney+.
  • Verizon likely played an important role in the successful launch of the streaming service.
  • Disney+ already boasts 10 million subscribers.

Disney’s (NYSE:DIS) stock value spiked on Wednesday following its 10 million Disney+ subscriber announcement . The news sparked interest in the company’s stock, causing it to go up within hours. The stock was trading at $137.39 at noon on Wednesday, and just five hours later, its valuation had jumped to $148.72.

Analysts have attributed the surge in subscription numbers to the company’s sprawling reach and media portfolio, which has grown exponentially after the Disney-Fox Entertainment Merger. The unprecedented subscription numbers surpassed year-end expectations.

The service was forecast to gain around 8 million subscribers by the end of the year, but this record was broken in a matter of days. Disney attributes the achievement to overwhelming demand for its products.

The Verizon Factor

Verizon has bundled a one-year free Disney+ subscription package for its Unlimited customers. The move is believed to have boosted subscription figures immensely as Verizon has approximately 100 million subscribers.

About 50 million Verizon users are eligible  for the Disney+ offer, which will be free during the first year and then $6.99 in subsequent months.

Can Disney Sustain These Numbers?

Competition among leading video-streaming companies is likely to saturate the market and eat into profits in the long-term. The most dominant company in the space right now is Netflix, with just over 135 million subscribers. It, however, charges $12.99 a month, almost double what Disney asks for.

For less than $7, Disney+ is set to offer over 600 shows and movies. Some anticipated exclusives include Big Shot, Diary of a Female President, Noelle, Stargirl and The Mandalorian.

To sustain growth, Disney is likely to leverage an array of secret weapons. It already owns Hulu, and this audience will be vital in its fight for dominance.

The company is currently offering access to ESPN+, Disney+, and Hulu for $12.99. The almost unbeatable offer will undoubtedly help it gain and retain both sports fans and movie lovers.

Disney has another survival trick up its sleeve, and this is its ad-supported content on Hulu, which only costs $5.99-per-month. Over 70% of its 80 million viewers are on this plan. The hybrid scheme generated close $1.5 billion in revenue last year. This is uncharted territory for companies such as Netflix.

Additionally, Disney was very strategic in its approach when creating Disney+. The service was structured to target different demographics. According to CEO Robert Iger , Disney+ is a four-quadrant product targeting males under 25, females under 25, males over 25, and females over 25 as the primary audience.

This multi-pronged approach is expected to sustain Disney’s subscriber numbers for the foreseeable future. It is worth noting that the service will only be available in five countries this year, namely the United States, New Zealand, the Netherlands, Australia, and Canada. An expansion beyond these regions will definitely bring in numbers to rival Netflix.

A Key Market Driver

Disney’s stock is expected to be in accession over the next one year. In April, shares jumped 23%  after its video streaming plans were unveiled. Market sentiment has remained high and colorful ever since.

In April, Disney shares jumped 23 percent after its video streaming plans were unveiled.

In a nutshell, the new venture is at the heart of Disney’s future valuation and will be a key stock market driver from now on.