By Hilary Russ
NEWYORK (Reuters) – ESPN+, Walt Disney Co’s sports video streaming service, could attract between 8 million and 12 million paying subscribers by the end of the fiscal 2024 year, the company said on Thursday.
Disney’s forecast for significant growth in paying customers in the next few years was disclosed in a presentation of its streaming video strategy to Wall Street.
Operating losses for ESPN+ are expected to be $650 million (£497.5 million) annually in both fiscal 2019 and 2020, Disney’s chief financial officer, Christine McCarthy, said during an investor day webcast presentation. But the service, which launched one year ago, should reach profitability by 2023, she said.
“I view this positively because I think that they need to illustrate the subscriber growth to validate the investment. They’re putting out some very strong number guides to the market,” said Patrice Cucinello, a director at Fitch Ratings. “They’re going guns blazing at direct consumer.”
As cable and traditional media companies lose subscribers to the likes of Netflix Inc, they are building new streaming video businesses that appeal directly to consumers.
Disney launched ESPN+ a year ago as a way to test its streaming services and distribute additional sports content directly to fans, for a monthly or yearly fee.
Since then, ESPN+ has drawn millions of subscribers, inked sports rights deals, and seen its mobile app rise in popularity. Disney is also moving forward with its larger plans for Disney+, which will stream its trove of new and classic blockbuster movies.
As for current paying sports fans, Disney said the number was currently over 2 million, or roughly what it disclosed in February.
Disney’s own estimates about ESPN+ growth seemed slightly higher than analysts, though its time frame was longer.
Morgan Stanley analysts expect 2.7 million people to be paying for ESPN+ access by the end of fiscal 2019 and 3.9 million by the end of fiscal 2020. By 2022, it could have 6.7 million, Morgan Stanley said.
MoffettNathanson gave a more modest outlook, predicting that ESPN+ will end fiscal 2019 flat, with just 2 million subscribers, growing to 4 million by 2022 and 5 million by 2023.
Analysts at Citi predicted that ESPN+ would have 4 million paying subscribers by fiscal 2020.
(Reporting by Hilary Russ; Editing by Leslie Adler)