Disney+ (DIS), Disney's new streaming video service, launched on Tuesday.
On Wednesday, the company announced that 10 million people have signed up for the service.
This blows expectations out of the water — in a note to clients published in late October, UBS analysts said they expected 4 million people would sign up by the end of this year and 8 million within a year of the Disney+ launch.
Within five years, Disney’s highest estimates for Disney+ signups is 90 million; in less than 48 hours the company is more than 10% of the way there.
On its earnings call last week, CEO Bob Iger said Disney+ is, "the culmination of four years of planning, organizational transformation and a lot of hard work, and we're excited to be on the verge of this new era."
The company bought BAMTech to power Disney+. Disney bought 21st Century Fox to bolster its catalogue. And Disney spent hundreds of millions of dollars making content from its premier franchises like Star Wars to make Disney+ more than just a back catalogue at launch.
And although some Disney+ users faced outages on Tuesday, and while Disney's deal with Verizon certainly helped bolster sign-ups on day one, the first 48 hours of Disney+'s life is a no doubt home run for the company.
In response to this news on Wednesday, shares of Disney (DIS) surged 7.2%.
But the real work of building an enduring streaming service begins now.
"I think established IP has a leg up with consumers," Netflix (NFLX) content chief Ted Sarandos said on the company's earnings call last month. "[Consumers] know what they're getting into. There's a lot of pre-built-in excitement. It makes the marketing a little easier."
And while it's not surprising to hear Sarandos somewhat downplay the task of flipping on the switch and bringing the Disney+ monster to life, his point is that the future, enduring success of Disney+ will hinge on what doesn't yet exist. And what popularity really means in the streaming world isn't measured just in box office takes and licensing agreements.
"In this past quarter, we made a movie called ‘Tall Girl,’ a hugely unknown cast, who, in 7 days, grew their social media following into the millions on Netflix and had over 40 million people watch it," Sarandos said on the call. "That's the ability to create a brand almost out of thin air, which, I think, is every bit as valuable as drafting off a bunch of other franchises waiting for them to burn out."
Disney, of course, has a demonstrated track record of doing more or less exactly what Sarandos describes. One day “Toy Story” didn’t exist, the next day it did.
But how franchises are conceived and thrive in the streaming world is different than a world in which viewer experiences are mediated only through liner television and movie theaters. Because streaming is a creation of and for the internet. And “winning” means you play by the internet’s measures of success: if it engages, it is successful.
In recent quarters, Netflix has emphasized at various points the social media impact its original shows and movies had on previously unknown stars. In its 2018 third quarter shareholder letter, for example, Netflix highlighted that “Stranger Things” star Millie Bobby Brown had no Instagram followers in July 2016 — a little over two years later, she had more than 17 million. (Today, Brown has 30.5 million.)
Compared to box office takes, Instagram follower counts can seem like a sort of knock-off measuring tool for a franchises's success. But unlike Disney, Netflix built its business on the internet first. In the Netflix worldview, then, Instagram measures what "the internet" — broadly defined — really thinks of its original content. Again: engagement is success.
Source: Yahoo Finance
Source: Yahoo Finance
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