Disney shares rose by 3% on Friday due to analysts bullish stance on the prospects of Disney's internet video streaming services. Disney reported weaker than expected 4th quarter earnings and generated $1.07 earnings per share instead of the expected $1.12. Normally when company's release earnings that are less than expected their stocks slightly drop because investors see the loss in value and aren't as incentivized to invest. The increase in their stock price means that investors are super optimistic about the prospects of this new streaming service. Netflix pretty much has a monopoly on the streaming industry so it will be interesting to see how a big name like Disney will compete with them. The industry is still very young and over the next 10 years more and more companies will venture into this industry because there is so much potential.
Disney announced plans in August to launch a direct to consumer streaming service in 2019 and an ESPN streaming service in 2018. They have recently made progress on how to price their product and how to convert their gigantic customer base into subs. Analysts are very optimistic about Disney and foresee a big bump in stock prices. It will be interesting to see if Disney will succeed in this endeavor because the potential is massive. ESPN has also been losing money for Disney over the last few years so maybe this new streaming service will revitalize ESPN and get it back on track.
https://www.cnbc.com/2017/11/10/disney-shares-jump-as-wall-street-getting-optimistic-media-giant-can-compete-with-netflix.html
ReplyDeleteI understand the optimistic outlook from investors and am interested to see if these endeavors will fare in Disney's favor. Streaming is the future and Disney is smart to jump on it. Netflix however has had great success along with other streaming sites like Hulu who has also made recent changes. Disney's big name and the large customer base of their subsidiaries like ESPN will result in higher earnings once streaming is implemented.
ReplyDeleteI think Disney will do well if they can make themselves a sort of monopoly. If the other streaming services have rights to streaming Disney's films and series, they will be quite substitute-able and will likely see smaller profits, if successful at all.
ReplyDeleteWith so many firms like this entering the market they are really going to have to find a competitive edge.