Shares of Walt Disney (NYSE:DIS) jumped more than 9% on Friday, hitting an all-time high, after the entertainment giant unveiled its highly anticipated streaming service and outlined its plans to integrate the newly acquired Fox assets into the fold.
Disney unveiled its Disney+ Netflix-competitor (NASDAQ:NFLX) at its investor day Thursday, saying it would launch Nov. 12 at a cost of $69.99 per year or $6.99 per month. Disney is targeting 60 million to 90 million subscribers globally by the end of 2024, with customers drawn in by the service's collection of Disney mainstays plus the company's acquisitions including the Star Wars franchise and Fox's library of content.
"Disney+ marks a bold step forward in an exciting new era for our company – one in which consumers will have a direct connection to the incredible array of creative content that is The Walt Disney Company's hallmark," CEO Bob Iger said in a statement. "We are confident that the combination of our unrivaled storytelling, beloved brands, iconic franchises, and cutting-edge technology will make Disney+ a standout in the marketplace."
Disney+ is one of a number of streaming options Disney has introduced as the company attempts to adjust to a changing marketplace. Company officials said they expect the sports-focused ESPN+ offering to become profitable in fiscal 2023, and Hulu, which it took control of as part of the Fox deal, turning a profit around that time or a year later.
The Disney+ announcement was hardly a surprise, but Wall Street was pleased with the details that were unveiled. Morgan Stanley's Benjamin Swinburne said the 60 million to 90 million subscriber target was well ahead of his 30 million expectation, and profitability by 2024 was also ahead of his forecast. Meanwhile RBC Capital analyst Steven Cahall kept Disney as a top pick following the presentation, saying the company had "exceeded expectations and should turn sentiment bullish."
While the plans for a streaming service were well known, it should not be understated that this direct-to-consumer model is a fundamental shift for Disney's television business. Given Disney's vast library of compelling entertainment titles, there is every reason to believe that Disney+ will be successful, but management has now set a very high bar for the nascent service to be considered a success.