On Tuesday, Disney ( DIS 0.29% ) launched Disney+, which is one of the most important products the media and entertainment conglomerate has introduced under CEO Bob Iger. In case there was any doubt about demand, Disney shattered that notion by announcing that the service grabbed a whopping 10 million sign-ups on the first day. Disney+ suffered from some minor hiccups initially due to strong demand that overwhelmed the company's content delivery infrastructure, but those issues were quickly rectified.
Investors applauded the news, sending the blue chip stock surging in the wake of the announcement.
Numerous ways to jump-start subscriptions
Keep in mind that the 10 million sign-ups will include a number of free trials; Disney offers a seven-day free trial to give users a test drive of the video-streaming service. The bigger test will be how many of those trial users will choose to renew their subscriptions for $7 per month or $70 per year.
Third-party estimates from analytics company Jumpshot pegged pre-launch subscriptions at 1.9 million. Those pre-launch sign-ups would include a promotion that Disney ran earlier in the year for D23 members that included three years of service for approximately $141, which translates into less than $4 per month.
There's also a separate promotion from Verizon that includes a free year of Disney+ to certain customers with unlimited data plans or 5G home internet. Unlike free trials, Disney will get paid through the distribution deal with Big Red. "It's a wholesale deal to us, so we will get paid for that," Iger told CNBC last month. "And they will also support us with a lot of marketing."
Iger also expressed confidence that the Verizon partnership will "have a significant effect" in "jump-starting subscriptions."
Marching toward 60 million to 90 million
The initial launch only includes three markets: the U.S., Canada, and the Netherlands. Disney+ will come to Australia and New Zealand on Nov. 19, followed by countries in Western Europe -- the U.K., France, Germany, Italy, and Spain, among others -- at the end of March 2020, Iger said on the earnings call last week. At the time, Iger had declined to quantify what kind of pre-launch interest Disney was seeing.
Within the next five years, Disney is targeting 60 million to 90 million global subscribers for Disney+, 8 million to 12 million subscribers for ESPN+, and 40 million to 60 million subscribers for Hulu. Following a deal inked with Comcast earlier in the year, Disney is now Hulu's majority owner and wields complete operational control over the service, and Comcast has effectively secured a minimum $5.8 billion payout for its Hulu stake in 2024.
For comparison, video-streaming leader Netflix currently has 60.6 million paid memberships in the U.S. and 97.7 million paid memberships internationally. Disney also noted that in the future it does not plan on providing subscriber data outside of its quarterly earnings calls.