Since its founding in 1923, Disney (DIS 0.59%) has become a staple of entertainment for all ages, and that success is reflected in its stock's performance. Since debuting on the New York Stock Exchange (NYSE) in 1957, Disney has treated investors to consistent gains over the decades, thanks in large part to its embrace of cutting-edge technology.
Recently, however, Disney's stock has struggled. In the last five years, the House of Mouse stock is down more than 19% and just in 2022 alone lost around 44% of its value.
Yet I believe there is still hope and plenty of room for Disney's stock to grow. Surely, the backdrop of economic uncertainty and fears of a recession have negatively impacted much of the stock market, and Disney clearly hasn't been spared. But despite this, the entertainment behemoth is still committed to providing innovative entertainment in new and innovative ways.
NYSE: DIS
Key Data Points
In 2022, Disney made considerable progress on its quest to create digital experiences for consumers. As people spend more time on their devices and new technology becomes more accessible, Disney is keenly aware that business models need to be developed to ensure it remains competitive.
Based on recent developments, it looks like plans are in place for Disney to tap into the potential that technology like the metaverse, Web3, blockchains, and augmented reality have to offer.
Disney fills new roles
Over the last year, Disney created multiple new job positions to ensure the company has adequate resources to build out its entertainment arsenal. One of those positions is Senior Vice President of Next Generation Storytelling and Consumer Experiences. The person who fills this position will be responsible for tapping into the potential of the metaverse, blockchains, and augmented reality. An opening for a Vice President position was also posted.
Then in September, viewed as a move to make sure it had its legal bases covered, Disney posted an opening for a Principal Counsel whose primary responsibility will be overseeing legal matters related to corporate transactions in the metaverse, non-fungible tokens, and blockchains.
Investing in the future
In my opinion, the most telling clue as to what Disney might look like in the future comes from this year's inductees in the Accelerator Program. The Accelerator Program is Disney's venture capitalist branch, which invests in up-and-coming companies to help fuel their development . This year's class is full of businesses that specialize in technologies such as blockchains, augmented reality, artificial intelligence, and Web3. One of the most noteworthy inductees is Polygon, a blockchain that has risen to prominence in the last couple of years due to its usefulness in non-fungible tokens (NFTs) and Web3. Disney's ultimate goal is that some sort of mutual relationship comes about, but that isn't a guarantee.
Disney enters the 21st century
While these newly created jobs and Accelerator Program inductees paint a clear picture of the direction in which Disney is headed, there is still some obscurity as to what exactly all of this will look like.
Based on these developments, I imagine the future of Disney taking shape in various forms. First would be a total makeover of the amusement park experience. With the help of augmented reality and artificial intelligence, rides might include new, digital-based features, and visitors would likely be able to interact with characters from their favorite movies. Apparel or NFTs could be earned as visitors embark on digital-based Easter egg hunts around the park where they use their own devices as a lens to find hidden prizes.
Then there's the in-home experience. Disney fans not visiting the amusement parks might be able to collect rare NFTs that are released on the anniversaries of their favorite movies, earn exclusive access to movies or experiences through the use of blockchain technology like smart contracts, or even deck out their digital avatars in fresh Disney apparel.
The possibilities are truly endless, but it's these types of ideas and conversations that are being held in Disney meeting rooms.
A buy today, a buy tomorrow
Now it might be difficult to form a position in Disney's stock based on a future development which remains a little hazy. However, there is one crucial aspect of Disney's business that might provide some necessary fuel for gains to arrive in 2023 -- streaming.
When Disney reported that they lost around $4 billion with Disney+, it spooked investors and amid an already shaky macroeconomic environment, its stock tumbled. But all that might be changing this year. Disney plans to increase the monthly subscription cost from $8 to $11. With its 160 million-plus subscribers that could close their margin to nearly break even. Even better, one of Disney's promotional offerings of Disney+ back in 2019 allowed customers to prepay for the new streaming service for just $4 or $5 a month, will be coming to an end this year. That would represent a near tripling of prices for those subscribers and could add more of a cushion to profit margins.
Former CEO Bob Chapek was quoted as saying that the metaverse and its associated technologies provide the foundation for Disney to provide the "next great storytelling frontier." While it looks as though Disney is full steam ahead, it might take some time. A focus on cutting some additional costs on their streaming and Disney might be on the verge of turning their streaming platform into a lucrative part of their business this year.
