Thursday, Nov 7th 2019

Disney Up +5% Ahead of Disney+ Launch


All eyes are focused on Disney ahead of its launch of Netflix-competitor Disney+. After reporting strong earnings at 4pm ET Thursday, Disney CEO came to speak on CNBC minutes after.

He revealed two operational wins, in our view:

1) Disney+ launched in beta in the Netherlands and it was being received extremely favorably. This reduces execution risk. Disney has officially proven it can build a viable version of Netflix.

2) Disney formed a partnership with Amazon to market Disney+. In this way, they are now "frenemies" - Amazon also has its own version of Netflix called Prime Video. What this shows though is that Disney wants to get scale, fast.

Key questions we'll be looking for after the rollout: - Does Disney+ cannibalize Hulu? (Disney also owns that) - How quickly will consumers adopt Disney+? - How will this affect Disney's presence on traditional TV? Namely, it's crown jewel asset ESPN.

We've been bullish on Disney+, despite skeptics citing heavy competition. Reminder of our variant perception:

"We believe [Disney+] will create enormous value for Disney by enabling today's one-time, third party revenue streams (like movie tickets) to be converted into more attractive, direct recurring payments to Disney. We believe the subscription service would also improve Disney's ability to further monetize its best-in-class portfolio by offering it direct access to valuable consumer viewing data."

As of this writing, DIS was a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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