Aly Song/Reuters
- Disney's streaming services could grow to 30 million subscribers by 2028, valuing it at $25 billion.
- The direct-to-consumer streaming service could generate $5 billion in revenue.
- Click here to get a live stock price for Disney.
Disney's new streaming service could draw in 30 million subscribers in the next 10 years, valuing it at $25 billion, according to a Morgan Stanley note.
The company is poised to make a significant reach into the 1 billion global pay-TV household market, given its exclusive rights to new films, large library offerings, and a share of Netflix's subscriber growth, which Morgan Stanley forecasts to be 10% to 12% in 2028. Back in August, Disney announced it was ending its exclusive Netflix deal in 2019 in favor starting up its own streaming service.
If, and when, Disney hits 30 million subscribers, the streaming service could generate $5 billion in revenue and roughly $1.5 billion of EBITDA, culminating in a $20 billion to $25 billion asset.
"Disney's brands and content depth and breadth give it a unique opportunity among existing content producers to build a large global customer base in a direct to consumer streaming model," Benjamin Swinburne, an equity analyst at Morgan Stanley, wrote.
Its competitive advantage over other direct-to-consumer streaming businesses is its well-known brands (especially Pixar, Marvel and Star Wars), and its track record of both a good quality content and a good quantity of content that is sure to support its offerings, Swinburne says.
However, he notes that the market's view of Disney is that it "has not proven any core competency" compared to its peers, and how it deals with technology, customer service and marketing has yet to be tested. Investors are also wary of Disney's decision to pull out of its exclusive movie deal with Netflix in 2019, further harming the company's potential of tapping into Netflix's vast subscriber base.
Disney shares are down 0.35% at $97.70.
To read more about why Disney's stock is having a tough time, click here.
