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Disney Needs 32 Million Subs to Break Even with Digital Streaming Service

Disney seems very pre-occupied with their recently announced streaming video service. With the company pulling its content off of streaming-giant Netflix by 2019, it seems that fans of Disney, Star Wars and Marvel properties will have no choice put to pay the Mouse to access that content.

But will they?

Or rather, will they in the numbers Disney will need to make the service break even?

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According to Business Insider, the magic number Disney needs to make this service viable is 32 million paying subscribers via a report from UBS.

To put it in perspective, Netflix just crossed the 100 million subscriber mark and they pretty much invented the current video on demand model 10 years ago.

Rival services like HBO Now has 3.5 million subscribers, and CBS All Access and Showtime combined only total 4 million.

NBC Universal has recently pulled the plug on its Seeso streaming comedy channel, citing it was too difficult to monetize.

Really, Netflix has become the biggest player in paid streaming video. Even YouTube is having a hard time with their paid version, YouTube Red, and Google plans to merge Google Play and the paid version of YouTube in the near future.

As much of an entertainment powerhouse that Disney is, is there sufficient interest from viewers to pay as much as they do for Netflix for access to only one studio’s content?

UBS seems fairly optimistic Disney can pull it off, according to the article.

This means Disney will be making a substantial upfront investment in the new service, and as a result, will need to show impressive subscriber numbers to please shareholders.

This investment is “both intriguing from a build the future growth of the company perspective, but also daunting in terms of the amount of lost third-party revenue,” UBS analysts led by Doug Mitchelson wrote in a note distributed Friday.

Disney has a massive back catalog of entertainment to have available on Day One. And the plans for launch include several exclusive new live-action movies and TV series, as well as thousands of classic Disney movies and television episodes. It’s possible (and very likely) that exclusive Star Wars and Marvel Studios movies and TV series might be among the offerings to entice even the most skeptical viewers.

Disney CEO Bob Iger said they plan to “launch big and launch hot.”

To close the gap between entrenched streaming companies like Netflix and Hulu, they will absolutely have to.

[Source: Business Insider, Photo: Star Tribune]

 


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