‘Hamilton’ did more for Disney + than increase registrations
Disney (NYSE: DIS) saw an increase in Disney + signups during Independence Day weekend after its release Hamilton last Friday. Third-party data companies have seen an increase in downloads for the Disney + app. CEO Bob Chapek did not say exactly how many new listings the company saw, but noted “there were a lot,” according to an audio recording of a meeting repeatedly leaked to The edge.
Chapek’s full quote is actually a lot more informative: “A large percentage of the new viewers who walked into Disney +, and there were a lot of them, were a different target audience, a different demographic than what we normally get. “
Hamilton not only increased signups and viewership for Disney +, but also expanded its audience. And Disney can build on what it has learned from the early film production release of the hit Broadway musical and repeat the process to continue to increase the appeal of Disney +.
The risk around Disney +
Disney + ‘s early sign-up numbers have been much better than expected. It has probably already passed the high of its initial five-year outlook for US subscribers (30 million).
But the risk for Disney + is that it will quickly sign up millions of subscribers, and then the growth will fall off a cliff altogether. That’s because Disney + is an easy-to-understand product thanks to the company’s strong branding and great marketing message. The people who want it knew they wanted it even before it launched. Indeed, only 19% of subscribers declared registered to watch the original Disney + series in a December poll, and that was after “Baby Yoda” went viral.
But after strong registrations in the first six months of the service, investor expectations have risen. While Disney has set expectations for just 90 million subscribers Tops meanwhile, the market deemed these numbers too conservative.
At least one analyst thinks Disney + will overtake 200 million subscribers worldwide by the middle of the decade. If Disney cannot continue to add followers after completing its launch in all markets, it will not reach that number.
In order for Disney + to attract followers on the scale the market is now expecting, it needs to expand the platform’s appeal beyond those who were planning on signing up anyway.
Enter Hamilton, center of the stage
Disney’s decision to exit Hamilton a year earlier than Disney + could not have been an easy decision. The producers of the stage show strongly resisted the idea until it became very apparent that theaters would likely remain closed until the end of the year.
But the success of Hamilton Attracting an audience to Disney + outside of the service wheelhouse is a testament to Disney’s strength as a streamer. He went from announcing the film’s release to debuting in less than two months. He was able to capitalize on strong intellectual property, a huge fan base for the original musical, and excellent marketing skills.
Importantly, all of these factors are imminently reproducible for Disney. It has the most comprehensive catalog of valuable intellectual property. In addition to this, the management has a keen eye on rights like Hamilton it still makes sense under the Disney branded umbrella, but pushes it slightly beyond its core. Disney still leads the box office when theaters are fully operational.
Taking this approach to expanding the Disney + audience is something the media company is already looking beyond the short term. “We will be evaluating each of our films on a case-by-case basis,” Chapek said during Disney’s second quarter earnings call. While the company considers its best opportunity to always be in theaters for most films, it understands that it may need to change course in some cases amid “changing and evolving consumer dynamics.”
Two or three releases a year that may have been hits on premium video on demand could be a lot more valuable than Disney + exclusives. This is especially the case if they can have the same impact on expanding the subscriber base as Hamilton.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.