Our friends at Deadline broke the story earlier today.
Disney Plus, the three-month old streaming service with lucrative brands Pixar, Star Wars, Marvel and Walt Disney, nabbed a total of 28.6 million subscribers as of February 3rd, 2020. That’s over half of Netflix‘s domestic subscriber base (and seeming ceiling) of 50 million, and about a third of Disney’s overall goal of a 90 million subscriber install base.
But that’s not the story.
The story is how many of those subscribers are locked into a full year of the service (having signed up earlier for a paltry discount of $10-25 dollars) and for those who are subscribing at a month-to-month basis, how many of them are going to stick around when Bob Iger announced that the key Originals everyone is waiting for (i.e. The Mandalorian, WandaVision, Loki and Falcon and the Winter Soldier) won’t even be dropping until August. That’s right — Winter Soldier in August, Mandalorian in October, and WandaVision in December.
That’s a half a year of being stuck with all the movies you’ve already seen, Jeff Goldblum, Forky, and Flight of the Navigator.
Therein lies the rub.
For most streaming services charging users less than the double-digit number of $10, churn (the act of someone cancelling out of the service) is generally in the 20-30% range. That means for every ten subscribers, only 2-3 of them drop off in any given month. That means, for the 28.6 million current subscribers that Disney Plus has to date, they’re losing about 800,000 subscribers each month from the month-to-month pool. Knowing that the service announced 10 million subscribers three days into launch (all the year-long subscribers and early adopters), we would adjust that number down to 558,000 cancellations per month, from an adjusted 18.6 million month-to-month subscribers.
So. In order for Disney Plus to continue to grow, they’ve got to convince people over the next six months to subscribe for the service despite the fact that there is no new Marvel, Star Wars or Pixar content coming to the service. And our belief is that new subscribers aren’t going to join at this point just because they’re missing out on free streaming of movies like Flubber and The Shaggy Dog.
At this rate, going into August, we’d expect Disney Plus to have a lower subscriber base of 25.3 million subscribers (based on 3% churn over the next six months) before adding any new subscribers. The real question is how many net new subscribers will Disney Plus get when Marvel launches Falcon and Winter Soldier in August.
And therein lies the rub.
To date, there is a pool of obsessive Marvel fans who did not subscribe to Disney Plus. They owned all the movies on digital or Blu Ray, and there was nothing new to see on the service. That is, until August. At that point, per Kevin Feige and Bob Iger, the Marvel Universe will expand to include these new stories, which will totally tie into the feature film MCU that the companies keep launching. They’ve been very clear that if you miss these Originals on the service, you may miss out on some of what’s coming in the MCU theatrical world.
And there are a lot of Marvel fans out there.
With all those data points at hand, our belief is that Disney Plus will not only make-up for the 3.3m cancelled accounts over the next six months with more than double that when the new Marvel originals premiere in August of this year. And it will prove that as long as Disney continues to roll out new, important, significant stories that tie to overall universes they continue to invest in, they will continue to keep users engaged and bringing new ones into the service.
But they are going to have to be better about Originals rollouts and make them more frequent than every six months if they’re hoping for a 90 million person subscriber base.
If anyone can do it, Disney can — but they’re going to have an uphill battle.