Recently, Disney announced that it was starting up its own streaming service. Since that would make it a competitor with Netflix, said announcement included the news that Disney would be pulling its media properties from said streaming service, though this won’t be happening all of a sudden. The exact details remain unclear at this point in time, but it seems that Netflix will continue to cooperate to some extent with Disney on shared projects such as the TV shows set in the Marvel Cinematic Universe. Regardless, Disney is serious about making its streaming service a success, as shown by the fact that it will be offering the much-anticipated Frozen 2 and Toy Story 4 along with other media properties of interest.
How Much Does Disney Need to Break Even on Its Streaming Service?
With that said, one of the most interesting issues is how much Disney would have to make for its new streaming service to prove profitable. Unsurprisingly, something as momentous as this new initiative has been the subject of much study, with an excellent example being a study by UBS. Said study concluded that Disney would have to secure 32 million subscribers at a cost of $9 per month for it to reach the break-even point, which is when a particular initiative earns sufficient revenues to make back its expenses to produce a profit of zero. In most cases, this means that being able to break through this point would result in a profit.
Of course, it should be noted that Disney’s break-even point could be something else because there is no guarantee that UBS’s assumptions will be true. For example, UBS assumes that Disney will charge a $9 per month subscription fee for the sake of being able to complete its study, but so far, Disney has released no information about the price that it plans to charge. Still, a $9 per month subscription fee is not an unreasonable estimate, seeing as how Disney can’t deviate too much from Neflix’s $9.99 per month subscription fee without seeing a negative impact on its number of subscriptions.
Can Disney Do It?
For those who are curious, 32 million subscribers is a rather high number. For comparison, Netflix is closing in on 100 million subscribers, which is the result of years and years of expansion as well as a wider range of offerings from not just Disney but also other media empires of note. As a result, it seems questionable whether Disney will be able to build up the numbers needed to break even within a short period of time, even though it has its own movies, the Star Wars movies, and the Marvel Cinematic Universe movies to offer to interested individuals.
With that said, it should be noted that Disney does not need to build up those numbers all at once. After all, it has plenty of resources, meaning that it can afford to take some short-term losses if that means it will be able to make profits in the long run. Furthermore, Disney has plenty of expertise and experience backing it up, meaning that even though the 32 million subscribers seem challenging, it can bring more than enough resources to overcome whatever obstacles that show up in the way of its ambitions. Simply put, Disney has proven itself to be a winner over and over again over the course of its existence, meaning that it is unwise to bet against it on something less than concrete evidence.
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