M&E Connections

Strong Disney Plus Launch Followed by Mighty ‘Frozen II’ Opening

Disney is currently basking in the warm receptions to its Disney Plus streaming service that analysts have been upbeat on so far and the release of its “Frozen II” animated movie sequel.

Initial signups for the company’s direct-to-consumer streaming service turned out to be even stronger than even some analysts had expected.

“I think many were surprised at the number of subscribers being 10 million” for Disney Plus right out of the gate, “particularly since Disney made it sound like it would take a long time to get there,” Wedbush Securities analyst Michael Pachter told the Media & Entertainment Services Alliance (MESA) Nov. 25.

The streaming service’s “early success proves that people are likely to subscribe to multiple services at these prices, and Netflix already conditioned 60 million people to accept these services as part of their entertainment option,” he said.

Meanwhile, at Morgan Stanley, “we feel even more bullish about Disney Plus’s potential following its over 10 [million] 1 day haul of sign-ups” – a result that has a potential added benefit for Disney because it “should have some pull through to” the Disney-controlled and majority-owned Hulu streaming service, Morgan Stanley analyst Benjamin Swinburne said in a research note.

As just one example of how much stronger initial signups were compared to what some expected, MoffettNathanson analyst Michael Nathanson had predicted only four days prior to the launch that there would be only 8 million worldwide Disney Plus subscribers by the end of 2019. He projected there would be 18 million Disney Plus subscribers by the end of Disney’s fiscal year 2020.

“It is fair to say that Disney has blown away initial expectations,,” Nathanson told MESA Nov. 26. “We haven’t updated our estimates yet,” he noted.

Disney on Nov. 13 – only one day after the Disney Plus U.S. launch – boasted that its new service “already reached a major milestone, achieving a remarkable 10 million sign-ups since launching.”

Those waiting for any update from Disney since then are bound to be disappointed because the company warned that, “moving forward, there are no plans to release” Disney Plus “subscriber data outside of The Walt Disney Company’s quarterly earnings calls.”

In its Nov. 13 statement, Disney didn’t mention the one blip of the launch, which was the widely-reported outage screens that thousands of users received on the first day when they tried to access it due to a coding issue, the company indicating to those subscribers that signups had topped its expectations.

Since then, “Frozen II” was released theatrically Nov. 22 and went on to have what Disney said Nov. 25 was a “record-breaking opening weekend, earning $358.4 million globally.” That made the film the “No. 1 day-and-date global animated debut of all time,” Disney boasted. Domestically, the movie “set a November animated record with $130.2 million, the biggest opening ever for Walt Disney Animation Studios, as well as for any animated film outside of summer,” it said. The film’s “domestic tally makes it the third-highest animated debut of all time in the U.S. and significantly surpasses the 2013 debut of the first ‘Frozen,’ which earned $93 million domestic over the five-day Thanksgiving holiday weekend,” Disney said.

“Frozen II” was No. 1 everywhere it opened globally for an estimated total of $228.2 million from 37 material markets, “led by China, where it earned $53 million,” Disney said. The film had the third-highest industry opening ever in South Korea, the highest opening weekend ever for an animated title in France and the U.K. (three-days), the third-highest opening weekend ever for an animated title in China and the highest opening weekend ever for a Disney Animation/Pixar title in Japan, China, Spain and Germany, the company said.

As Disney Plus has initially performed better than Nathanson expected, he said “Frozen II” has “done better than expected as well,” adding it’s a “good time to be a Disney shareholder.”

Wedbush’s Pachter said Nov. 25 he was “not surprised at” the performance of “Frozen II” so far “at all.”

Disney Plus will benefit in the near future from the movie’s performance. After all, as Disney pointed out, the new service is the “streaming home for movies and shows from Disney, Pixar, Marvel, “Star Wars,” National Geographic, and more, together, for the first time.” That includes being the “exclusive streaming home for films released by The Walt Disney Studios in 2019 and beyond,” including “Frozen II,” “Captain Marvel,” “Avengers: Endgame,” the live-action “Aladdin” and “The Lion King,”Toy Story 4,” “Maleficent: Mistress of Evil” and “Star Wars: The Rise of Skywalker.”

That latter movie, the latest entry in the “Star Wars” film series, opening Dec. 20, stands to end the calendar year and start 2020 with a knockout blow to the rest of the rival theatrical film slate after the company’s one-two punch of Disney Plus and “Frozen II.”