Walt Disney increased prices and subscriber forecasts for its video streaming business, but warned the unit would lose money until 2024, highlighting the punitive economy of online entertainment.
The world’s largest media group has said it will increase the price of its flagship Disney Plus service in the United States, while dramatically raising the forecast for subscribers, mirroring the roar. success of its streaming push.
Disney now predicts that Disney Plus will attract between 230 million and 260 million subscribers by 2024, more than triple its previous forecast.
But streaming is a costly business, as companies including Netflix invest billions of dollars to produce new shows and movies.
To maintain the flow of registrations, Disney plans to double its annual investment in content to around $ 15 billion by 2024, when its streaming business will generate profits, the company has predicted. Streaming losses are expected to peak next year, the group warned.
During a four-hour presentation on Thursday, Disney made its big pitch for the next step in its streaming mission. After a flying start, investors and analysts wondered how the company could support its growth and attract new customers to Disney Plus beyond its die-hard fans.
$ 15 billion
the value of Disney’s annual investment in new streaming content by 2024
The company’s response: more content. Disney said it is working on around 35 TV series – including 10 from the Marvel franchise and 10 based in the Star wars universe as well as Pixar animations – as well as 15 films to be released on Disney Plus in the coming years.
Disney Plus launched last year with a catalog of hundreds of movies and TV shows, but has been criticized for not offering enough original new programming beyond The Mandalorian, the shot Star wars spin off.
Disney Plus subscribers had jumped to 87 million on Dec. 2 from 73 million two months earlier, said chief executive Bob Chapek.
Disney shares have climbed more than 4% in after-hours trading. Its stock price has held up this year even as the pandemic wiped out billions in profits, as investors focused on the promise of streaming.
Amid an industry-wide battle for the future of entertainment, Disney has quickly established itself as a serious competitor to Netflix. But Disney Plus is still far behind Netflix when it comes to the amount of new shows produced.
Netflix added more than 370 TV shows and movies last year, which equates to one new show every day, according to Variety data. Kareem Daniel, who oversees the distribution of Disney creative content, said the goal is to add something new to Disney Plus every week.
Bob Iger, executive chairman, said Thursday that Disney was focusing on “quality over quantity.”
Digital streaming has been the company’s only bright spot this year, as lockdowns have boosted demand for home-watch shows.
But the coronavirus wreaked havoc on the rest of the business, as Disney struggled with empty theaters, shutting down or downsizing its theme parks, slashing ad sales, and shutting down TV and film production. The company recorded a net loss of $ 2.8 billion in the year ending Oct. 3, after making $ 10.4 billion the previous year.
With limited cash flow, Disney this year abandoned its ambitious plans to roll out Hulu, its other entertainment streaming service, worldwide.
Instead, Disney announced in August that it would expand Star, the Asian pay-TV network it bought from Rupert Murdoch, as a more adult-focused streaming service.
In Europe and Canada, Star will become a tile within Disney Plus from February. Disney is raising the price of Disney Plus in Europe from € 7 per month to € 9, the company said Thursday.
In the United States, the price of Disney Plus will increase by one dollar to 8 dollars per month in March.