Walt Disney has worked some real magic. In just a year, the entertainment giant has managed to build a streaming empire with its trove of content from the likes of the Marvel and Star Wars franchises. For Netflix, staying ahead may mean stumping up to buy a studio.
Covid-19 may have crushed Disney's theme parks but there was a bright spot: millions of people stuck at home signed up for its streaming services. On Thursday, Disney Chief Executive Bob Chapek completed a victory lap in a four-hour presentation to investors.
Since its launch in November 2019, Disney+ has amassed some 87 million paying customers, well ahead of the top end of the company's target of 90 million by the fall of 2024. It is doing so well that Disney increased its forecast to up to 260 million subscribers for Disney+ for the same time frame – with another potentially 90 million from its other streaming services by then.
Disney shares climbed more than 10% on Friday, hitting a new high and taking the company's market capitalization north of $300 billion.
In a sense, the Magic Kingdom has been preparing for this moment for years. A steady string of smart acquisitions from Marvel to Pixar and Lucasfilm to parts of Rupert Murdoch's Fox has left Disney with an enviable library. It plans to release more than 100 titles a year on Disney+, ranging in a dizzying array of entertainment including two spinoffs of "The Mandalorian." It is jacking up its content expenses for that service alone from around $4 billion to up to $9 billion in four years.
Netflix was the most successful streaming pioneer and now has nearly 200 million customers, a base built over more than a decade. It's not burdened with legacy assets – Disney still has to wrestle with the decline of traditional TV and cable customers, for instance. But the fight for digital subscribers requires a steady stream of content, and Disney's empire is now striking back on that front.
To match its rival, bosses Reed Hastings and Ted Sarandos might fancy a studio like Sony Pictures Entertainment or Paramount Pictures. That, though, could mean the $220 billion Netflix breaking its modest dealmaking habit.