Still from the “The Mandalorian” series on Disney’s streaming service Disney +.
Disney’s four-hour Investor Day on Thursday was a sign of power.
It is absurd to have people in front of screens for four hours to watch an investor day. The event had several breaks!
But when Disney brought out show after show for Disney + – methodically ticking off Marvel character after Marvel character, Star Wars spinoff after Star Wars spinoff, Pixar movie after Pixar movie (The Verge did you a favor and the list of Announcements for Major Selected 52) – I had to think about how Disney is putting the streaming video game on a whole different level than the competition.
For pretty much every other company in the streaming wars, the goal is to acquire the most popular content in order to entice paying monthly subscribers. That turns content spending into an arms race as companies like Netflix, AT & T’s WarnerMedia, Comcast’s NBCUniversal, ViacomCBS and Discovery dart series, producers, actors, and ideas to generate contemporary hits.
But Disney’s strategy is different.
Disney methodically builds films and displays its own intellectual property, then uses hit characters to introduce new ones. It has turned actors into superheroes – Paul Rudd is Ant Man, Scarlett Johansson is Black Widow, Robert Downey Jr. is Iron Man, Mark Ruffalo is Hulk, etc. – and will use them repeatedly in feature films, Disney + series, and cameos . It announced a dozen Star Wars content on Thursday that revived actors in old roles, including Hayden Christenson as Darth Vader and Ewan McGregor as Obi-Wan Kenobi, and created new stars.
Disney then takes these films and series and builds rides for theme parks based on them. It sells goods from them. It builds a world of American culture on them.
This flywheel isn’t new to Disney. But the sheer boldness could be seen on Thursday. Disney’s four-hour show was a ruthless, punitive display of IP-controlled content. It reminded me of when the US Dream Team Olympic basketball teams played against other countries and pulverized them with waves of talent into submission.
Investors appear to agree that the company’s stock was up nearly 15% on Friday morning, an otherwise non-working day for the market.
Disney hasn’t even focused on ESPN +, which is projected to have 20 to 30 million subscribers by 2024, up from an old estimate of 8 to 12 million. That number doesn’t even explain when ESPN could start moving high-rated live sporting events to streaming linear cable television, assuming Disney still owns the rights.
Bob Iger, Disney Executive Chairman, deserves credit for developing Disney’s streaming strategy based on its powerful resources. WarnerMedia has DC Comics and has distributed the Harry Potter films, but does not own any theme parks. NBCUniversal has theme parks but has to license some of its most popular intellectual property rights like Harry Potter as it doesn’t have the IP. ViacomCBS has Star Trek and SpongeBob, but so far has differentiated its streaming ambitions in terms of live NFL games and breaking news. Discovery unveiled its streaming plans for non-written television just last week. Needless to say, there is no investment in films and theme parks from HGTV and Food Channel.
Disney’s headline moment came towards the end of the presentation when it was announced that the Disney + subscriber estimate had been raised from the previous estimate last year from 60 million to 90 million to 230 million to 260 million by 2024. This type of increase is amazing.
Perhaps more impressive, Disney’s streaming push has already hit Wall Street’s goal of moving from traditional pay-TV to streaming: it has hit a trade multiplier that surpasses Netflix. Disney’s price / earnings ratio is 65. Netflix’s forward P / E is 56. For comparison, Viacom’s forward P / E is 8.5 and Discovery’s 9.2.
This is no small matter. Just two years ago, getting Wall Street to appreciate a traditional media company like Netflix was purely theoretical. Now Disney has done it. The share price has doubled since March.
As Discovery CEO David Zaslav told CNBC last week, Disney has already won the streaming wars. Investors’ day on Thursday was a public victory round.
Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.
WATCH: Disney predicts 230 to 260 million streaming subscribers by 2024