Disney Plus Signed Up 24 Million U.S. Subscribers in November and Took Bite Out of Netflix, Analysts Estimate
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Disney Plus had snagged an estimated 24 million U.S. subscribers as of the end of November — and the strong debut for the Mouse House’s new streaming package boosted cancellations among Netflix customers, according to a new Wall Street analysis.
The estimates come from the research team at Cowen & Co., based on a census-weighted survey of 2,500 U.S. consumers conducted last month. Per the survey, 21% of total respondents said they signed up for Disney Plus in November, suggesting the 24 million customer base exiting the month. That would blow away previous Wall Street forecasts for Disney Plus, which had pegged less than 20 million subs worldwide for 2020 even after factoring in expected lift from the one-year-free offer from Verizon for certain customers.
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While some research has indicated Disney Plus has had minimal impact on Netflix, Cowen & Co. estimated that Disney Plus will result in about 1 million additional U.S. Netflix customers cancelling service for the fourth quarter of 2019. All told, about 5.1 million Netflix subs in the States will bail in Q4, but the higher churn “appears manageable” for Netflix, Cowen analysts led by John Blackledge said in the report issued Wednesday.
“The incremental churn uptick [for Netflix] appears reasonable given the Disney+ launch, which has been highly publicized and includes various marketing programs, including a Verizon promotion that offers Disney+ for free for one year,” the analysts wrote.
For Q4 2019, Netflix forecast 7.6 million global paid net adds, comprising 600,000 in the U.S. and 7.0 million for the international segment. Cowen’s current estimates put Netflix net adds for the current quarter at 500,000. The analysts pointed to Netflix’s “strong” content slate for Q4 as helping minimize the blow from Disney Plus, including high-profile originals like “The Irishman,” “Marriage Story,” “6 Underground,” “The Two Popes” and “The Crown” Season 3.
Meanwhile, it’s worth noting that a large swath of Disney Plus users in the U.S. are currently not paying for the service.
About one-third (34%) of Disney Plus’ U.S. customers — or 8 million as of the end of November — are on one-year-free offer from Verizon for certain customers, while the remaining 66% are on paid plans, Cowen’s analysts estimated. It’s possible Disney Plus could see a tsunami of churn once the Verizon freebie deals roll off in late 2020. In addition, the Cowen survey data indicated there were about 19.4 million consumers who subscribe to both Netflix and Disney Plus, implying an 80% overlap between the services.