Walt Disney (NYSE:DIS) ended 2020 with 94.9 million Disney+ subscribers, and it continues to grow quickly more than a year after its initial launch. Still, it's a long way from Netflix's (NASDAQ:NFLX) 203.7 million subscribers.

But one analyst thinks Disney's Hotstar property in South Asia will propel it to more worldwide subscribers than Netflix by 2026. That year, Disney+ will have 294 million subscribers and Netflix will have just 286 million, according to Digital TV Research's Simon Murray.

The Disney+ logo.

Image source: Walt Disney.

Disney will dominate India

While Murray's model suggests Disney+ will have more global subscribers than Netflix worldwide, there's just one country where Disney+ subscribers will outnumber Netflix's: India. Murray says Disney will have 98 million Indian subscribers versus just 13 million for Netflix.

Disney offers Disney+ Hotstar in India (and Indonesia) for a substantially lower price than Disney+ in Europe, North America, and Latin America. A household can subscribe to its basic plan with advertisements and limited content for just 399 Rs (about $5.50) per year, and they can get everything Disney has to offer ad-free for 1499 Rs ($20.60) per year or 299 Rs ($4.10) per month.

And Disney has a lot to offer. On top of the standard Disney+ content available in the U.S., Disney+ Hotstar Premium includes sports rights like IPL cricket and the Cricket World Cup, some of the best HBO series, and tons of local content. That makes it one of the best values in streaming anywhere in the world.

Netflix has struggled to attract an audience in India and South Asia, but management says it's seen good traction with its mobile-only plan in those markets. The mobile-only plan introduced in 2019 costs 199 Rs ($2.70) per month in India. That makes it more expensive than an annual Disney+ Hotstar Premium subscription for a more limited viewing experience. Still, those who do subscribe to Netflix's plan in India say they're willing to pay more, and management says it's seen strong retention.

Does Disney have a pricing problem?

Murray says Disney+ Hotstar will account for 37% of its total subscriber base in 2026. As a result, Disney will generate just $20.76 billion from Disney+ subscriptions that year, about half of what Murray expects from Netflix. He estimates just $2.62 billion will come from India's 98 million subscribers.

CFO Christine McCarthy said Disney+ Hotstar accounted for 30% of its global subscriber base as of the end of December. It could account for as much as 40% by 2024, she said during her presentation at Disney's investor day in December.

Murray's analysis suggests Disney+ Hotstar subscribers in India will pay an average of $2.23 per month in 2026, which is strong price appreciation in the market. However, he thinks Disney+'s average price per month outside of India will be just $7.71 per month. Last quarter, Disney generated $5.37 per month per Disney+ subscriber excluding Hotstar. Disney will enact its first price hike in North America, Europe, and Latin America next month, and it should result in an average increase of more than $1 per subscriber. 

Netflix has increased its average revenue per user by $1.14 over the last two years, despite outsized growth in international markets with lower average pricing. But Murray doesn't expect Disney to be able to copy Netflix's success outside of India over the next five years.

Considering the content investment Disney's making in Disney+, it should be able to raise prices much more than that over the next half-decade. When Netflix's content expense went from less than $2 billion (what Disney spent on content last year) to $9.2 billion (a bit more than what Disney plans to spend in 2024), it also increased pricing from $8 per month in the U.S. to $13 per month for its most popular plan.

While Disney+ subscriptions will skew toward India versus Netflix's broad appeal in markets with greater average purchasing power, that doesn't mean it won't be able to raise prices quickly in more established markets. That said, the media company might not raise prices if it can return to the box office glory of 2019 post-pandemic. That gives it a long runway to grow its total subscribers without pressuring cash flow for the overall company. 

Murray's subscriber estimates are in line with Disney's outlook provided at its investor day in December, but there's likely a lot more room for revenue upside than his model suggests.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.