Now, an activist investor, Dan Loeb of Third Point, wants Walt Disney to step on the gas -- in a virtual all-in move to close the gap with Netflix in premium video streaming.
Loeb wants Disney to permanently suspend its $3 billion dividend and put all that money into content creation for Disney+ (or perhaps other D2C platforms, Hulu and ESPN+.
While Disney has been a major TV and movie content producer, it doesn’t rival Netflix in the streaming space. As yet.
While $3 billion sounds like a lot of money, remember among the biggest streamers, this is a modest-to-low annual amount to spend on original and/or acquired content.
One forecast from BMO Capital Markets estimates Netflix will lay out $17.3 billion for original content this year, a $2 billion increase from 2019. By 2028, projections are Netflix will spend $26 billion per year on content.
Then consider the billions needed to compete with other growing major players when it comes to content investment -- Amazon Prime Video, HBO Max, Peacock, Apple TV+ to name a few.
For its part, Apple TV+ spent $6 billion on content before its launch in November 2019; Amazon Prime Video is projected to spend $7 billion this year.
This isn’t to say Disney hasn’t seen big success -- at least in terms of subscribers. It's 11 months
since Disney+ debuted — and it has 54.5 million global subscribers -- well above all earlier estimates.
But now, it needs to continue to ramp up its ground game.
By that we mean more original content keeping existing consumers happy and pull in new users. Disney+ did that with the TV series “The Mandalorian” and more recently with original theater quality movies, such as “Mulan.”
Other data to consider: The Walt Disney Company spent around $24 billion for all content -- movies, TV, and digital -- in 2019. At the same time, it initially projected a rise to a modest $2.4 billion per year in five years for Disney+.
The last number is key: The entire premium streaming video industry for acquiring/producing content is roughly $35 billion to $40 billion, according to estimates.
So adding $3 billion is relatively chump change — a little less than 10%. That should tell you how far all premium streamers in the still nascent CTV marketplace need to go.