Let's look at Disney Plus and it's real bottom line. Netflix was paying Disney approximately $300 million a year. Let's also assume their would have been a big increase to $600 million if they didn't remove their content. In order to understand, how that compares to Disney Plus revenue, $600 million is $50 million a month. However, Disney Plus has 28.6 million customers paying an average of $5.50 a month or $157.3 million a month. Now. there are also costs for the new Disney Plus shows, which Disney said would be about 1 billion the first year. a number I think will be higher. Using a number of $2 billion brings the monthly expenses up to $166.7 million a month or $217 million a month in total programming costs. Add in $33 million a month to cover the costs with running the the service and the total needed to break even is $250 million a month. so Disney only needs anoth $92.7 million a month to become profitable.
The thing to remember though is that even if Disney Plus breaks even, the company makes more money that they would have without it. Disney will make a profit on the production of the shows and movies made directly for Disney Plus. The Studios are also making more from Disney Plus, my estimate of 600 million less 300 million they were receiving from Netflix is 300 million more. So. when will Disney Plus be profitable? My guess is September.
How do I arrive at the estimate. I start with the fact that Disney Plus added 2 million customers in January and a few days of February. If Disney addds 4 million more in North America between early February and the end of September, that adds $22 million a month and brings the deficit to $70.7 million a month. Now, how many customers does Disney have to add abroad to reach the $70.7 million figure. First, Europe will be priced similar to the US, so between March 24 and the end of September, I think a realistically conservative number if 10 million of $55 million a month. That leaves another $15.7 million a month, which I think will come from India and elsewhere.
The bottom line to me is fairly clear. Disney Plus is a great addition to the company and will not only be profitable in the long term, it will only take the 1 calander year to reach profitability but it will be adding to the bottom line sooner than that.
The thing to remember though is that even if Disney Plus breaks even, the company makes more money that they would have without it. Disney will make a profit on the production of the shows and movies made directly for Disney Plus. The Studios are also making more from Disney Plus, my estimate of 600 million less 300 million they were receiving from Netflix is 300 million more. So. when will Disney Plus be profitable? My guess is September.
How do I arrive at the estimate. I start with the fact that Disney Plus added 2 million customers in January and a few days of February. If Disney addds 4 million more in North America between early February and the end of September, that adds $22 million a month and brings the deficit to $70.7 million a month. Now, how many customers does Disney have to add abroad to reach the $70.7 million figure. First, Europe will be priced similar to the US, so between March 24 and the end of September, I think a realistically conservative number if 10 million of $55 million a month. That leaves another $15.7 million a month, which I think will come from India and elsewhere.
The bottom line to me is fairly clear. Disney Plus is a great addition to the company and will not only be profitable in the long term, it will only take the 1 calander year to reach profitability but it will be adding to the bottom line sooner than that.
