Do Disney Bulls Have It All Wrong?

The excitement surrounding Disney (DIS 0.14%) has reached a fever pitch. A slew of potential box-office hits are getting released this year, the takeover of 21st Century Fox (FOX +0.00%)(FOXA +0.00%) is imminent, Star Wars theme park extensions are opening in California and Florida, and new streaming service Disney+ will launch later this year. 2019 is going to be a busy year, to say the least.

And yet, even though Disney's stock has risen 11% in the last 12 months, share prices have failed to run higher since 2015. Disney is a powerhouse in the entertainment industry, but it has ample competition -- from the old guard in the industry and newer start-ups alike. But perhaps Disney's biggest competitor? Itself.

To be clear, I own a lot of Disney stock, and I think the Mickey empire will do quite well in the years ahead. It could be a bumpy path along the way, though. And with so many growth catalysts seemingly lining up this year but Disney's stock still looking sleepy, Wall Street would seem to agree. Here are some of the risks that could keep a lid on the House of Mouse.

Check out the latest earnings call transcript for Disney.

Box office records or theater fatigue?

Disney's first big production title of the year, the sci-fi/superhero Marvel Cinematic Universe movie Captain Marvel, releases the second weekend of March. It kicks off an incredibly busy year at the movies, with at least one a month coming out through the summer months.

Data source: Box Office Mojo.

That's a lot of movies, and it doesn't include releases from Fox that will soon also fall under the purview of Disney. That includes titles in the X-Men universe like Dark Phoenix (June 7) and New Mutants (August 8), to name just a couple.

Flooding theaters with big budget productions is one way to ensure box office domination, but it's a lot to ask of moviegoers. Total tickets sold at the box office have been stagnant for years in the developed world. Thus Disney executives could end up asking patrons to choose -- and not between a Disney flick and a rival studio's film, but between different Disney films. That could be an expensive outing, making for a bigger but less profitable combined movie segment.

Captain Marvel, the latest entry into the Marvel Cinematic Universe. Image source: Disney.

Too many streaming options

Of course, there is an upshot to the coming flood of Disney content: The media empire will need all of that extra entertainment to populate its streaming services. The brand new one, Disney+, will be geared toward families and will launch in the second half of 2019. And then there's Hulu, which Disney will be majority owner of after the Fox takeover.

Hulu made good progress adding users last year, reportedly growing 50% to 25 million, but it's still unprofitable. Prices were recently adjusted to try and steal away subscribers from sector leader Netflix (NFLX +1.15%), and Hulu will apparently become the home of more adult-oriented content -- including many of the shows and movies from Fox. That should be enough differentiation to keep the two from competing with each other.

Or is it? The streaming TV business isn't as simple as grouping up some shows and movies and launching a service. It costs money, including the continuous creation of new entertainment, and it will take more than just a few million subscribers a month just to break even. Fellow Fool contributor Adam Levy thinks it could take at least 10 million for Disney+ to break even. With two money-losing services under the Disney umbrella -- Hulu and Disney+, not to mention ESPN+ -- jostling with Netflix and other competing services for subscribers, the company's streaming aspirations may not go as smoothly as hoped in 2019.

Overcrowding at resorts?

While the TV streaming business is about to begin competing for subscribers, Disney's parks may have the opposite problem: crowds. Or maybe "mob" is the better word. Traffic keeps going up at the theme parks -- 4% in 2018 alone -- and that should continue in 2019. Consumers' increasing willingness to pay up for entry into the Magic Kingdom is only part of the reason; the opening of Star Wars: Galaxy's Edge at the California and Florida resorts later this year are expected to draw huge numbers of attendees as well.

That's normally a great problem to have, except that overcrowding is not a sustainable situation long-term. Disney has tried to mitigate the problem with higher ticket prices and other crowd control measures like flex scheduling, encouraging mid-week attendance, and fast-passes that even out the lines for rides, but the fervor building over Galaxy's Edge could put the parks at capacity when they open. That's sure to decrease visitor enjoyment, especially for the less enthusiastic Star Wars fan wanting to see other parts of the park, and decreases the chances of repeat visits. Or the reports of overcrowding could keep some patrons away entirely.

And then there's the loss of efficiency that could happen with such great crowds. We'll have to see how Disney handles the influx of guests, but the grand opening of the new park additions could also hit speed bumps this year, speed bumps that show up in financial results.

Long story short, 2019 is going to be a very busy year for Disney, but that doesn't necessarily equate to a slam dunk for financial results. The entertainment juggernaut's initiatives are going to cost money, and will undoubtedly have wrinkles that need some ironing. Does that mean the Disney bulls are wrong? Not necessarily, but they may have to be patient for the corral to open before Disney shares stampede higher. Or maybe they won't have to be that patient. Either way, it's going to be an eventful year.