Not only should Disney+ perform well this quarter, according to the data below, but keep in mind, Roku is downstream from Disney+ and will benefit from the company’s success.
When I was researching Facebook last week, something really stood out to me. Disney+ was ranking very high on both free apps and top-grossing apps on Android and iOS. On a few days, Disney+ beat out #1 sensation Tiktok, and on most days, the app beat out Instagram, Snapchat, YouTube, Facebook, Facebook Messenger, and Whatsapp.
This is unusual because the majority of the OTT media downloads don’t come from smartphone app stores. They come from an OTT player, like Roku, Amazon Fire, Google Chromecast or Apple TV.
This deck was collected at the four-week mark (or December 12th). Apptopia told me in an email that Disney saw a total of 30 million downloads on the app store in November and December (so, basically another 8 million after the deck was published).
You’ll see in the deck that retention is lower than usual, but with the OTT volume, Disney should be able to have a decent report tomorrow. Retention is probably low due to viewers watching The Mandalorian and not returning to the app. Disney will also have to prove it can convert free subscribers to paying subscribers when promotions expire (i.e. the Verizon promotion is a year of free Disney+).
From my perspective, this is positive data for Disney and I’m excited to see the earnings report tomorrow. I fully expect Disney to permanently overtake Amazon Prime Now for the number two spot over the next year or so. Global will be a significant strength for Disney.
Theme parks in Hong Kong may affect earnings. The coronavirus may also affect theme park earnings and theater earnings in fiscal Q2 2020 ending in March. I think analysts will look at these as temporary setbacks and will be more focused on Disney+.
Disney also probably spent a decent chunk of change on advertising this quarter. This may affect their earnings, but I think any positive news on Disney+ will overshadow this. Roku will benefit from the ad spend. Also, look at page 8 in the deck– it shows the effects Disney+ has had on Roku downloads.
Here’s a note from Needham on the Disney-Roku relationship that I highlighted in my convictions update.
Please note, the Disney+ information will be in MarketWatch tomorrow per an agreement with Apptopia. I will not be publishing the Roku download information on page 8 of the deck and will keep that exclusive for premium subs.