When it comes to streaming video, Disney (DIS) has an advantage that none of its chief rivals can boast: the company has relationships with cable companies going back decades. The purveyor of The Disney Channel, ESPN, and Freeform (formerly ABC family), recently added National Geographic and FX to the mix, expanding its cable empire with the addition of assets acquired from Fox.
Disney has found a way to grow its empire, using its cable relationships to expand the reach of its over-the-top ambitions. The company recently signed a deal with a French cable provider to be the exclusive home of its new streaming service, Disney+.
A longtime partner
Disney has inked a deal with Vivendi SA's (VIVHY -0.90%) pay-TV operator, Canal Plus Group, ahead of Disney+'s debut in France on March 31, 2020. What makes this deal even more compelling is that Canal will be the exclusive provider of Disney+ for French consumers, shutting out other distributors like Orange, SFR, Bouygues Telecom, and Free. Any telecom company or online provider in France will be forced to go through Canal to secure distribution for their viewers.
Canal is the largest cable provider in France and already had a long history with Disney, having been the studio's exclusive rights partner for a wide variety of content, including films from Walt Disney Pictures, Marvel Studios, Lucasfilm, and Pixar. The company is also the sole provider of Disney's cable channels in the country, including the Disney Channel, Disney Junior, National Geographic, Voyage, and Fox Play.
While this may not seem like that big of a deal for Disney, it's an important agreement nonetheless. Although the majority of users in the U.S. access streaming services via apps on smart devices, the majority of pay-TV users in France still use their cable boxes to tap into streaming platforms.
Disney already has an exclusive licensing deal with Comcast's European cable operator, Sky, in Germany, Italy, and the United Kingdom. Disney+ is scheduled to launch in France, Germany, Ireland, Italy, Spain, Sweden, and the U.K. in the first quarter of 2020.
Each of these agreements gets Disney+ ever closer to its ambitious subscriber goals.
A strong start
On the day after the Disney+ launch, the company said that due to "extraordinary demand," the streaming service had achieved "a remarkable 10 million sign-ups since launching." While Disney doesn't plan to offer additional updates outside of its quarterly financial reports, third parties are doing their best to estimate the platform's progress.
Data from Sensor Tower suggests that the Disney+ app has been installed by 28 million users across five countries in the first 30 days since it launched, generating about $55 million in mobile subscription payments. To date, Disney+ has debuted in the U.S., Canada, Australia, New Zealand, and the Netherlands.
And that's not all. Market intelligence provider Apptopia reported that the Disney+ app has been downloaded more than 22 million times and has generated $20 million in in-app purchase revenue. It's also been ranked No. 1 in both major mobile app stores every day since the service launched four weeks ago.
While the data varies, one thing is clear: Disney+ hit the ground running and has thus far exceeded even the most bullish expectations.
One step closer
Disney set a high bar when it announced plans for its streaming service at its investor day back in April, expecting to attract between 60 million and 90 million subscribers worldwide by 2024. The company also forecast peak operating losses to occur between 2020 and 2022, and said the service should achieve profitability by 2024. These ambitious goals, and Disney's subsequent execution, have made it one of the best-performing consumer discretionary stocks of 2019, with gains of more than 35%.
If the third-party numbers are anywhere close to correct, Disney+ is on track to achieve its subscriber goals well ahead of schedule, which will make the streaming unit profitable far sooner than anyone anticipated.