Disney’s ambitious new streaming service has already achieved a major subscriber milestone, just one day after the app launched to hype so fervent that the influx of users caused widespread technical hiccups.
More than 10 million people have signed up for the $6.99-a-month service so far after it officially launched Tuesday morning, according to the company. Disney, in a brief statement Wednesday, cited “extraordinary consumer demand” for the new product.
People who sign up for the service get a seven-day free trial, so it’s impossible to predict how many will stick once that trial period is over. Disney also enticed users with a deal for Verizon Communications wireless and new home-internet customers to sign up for free for a year.
But the early numbers are an indication of strong interest in the new product, which is a major gamble for the Burbank-based company as it looks to take on Netflix and others in the direct-to-consumer space.
The first-day results exceeded expectations of Wall Street analysts, many of whom predicted that it would take until the end of the year for Disney+ to reach 10 million sign-ups. Disney Chairman and Chief Executive Bob Iger has made Disney+ the company’s top priority over the last year, and much of his legacy rests on its success.
Disney shares soared on the numbers. The stock rose 7%, or $10.14, to a record of $148.72.
Disney has projected 60 million to 90 million subscribers globally by 2024, with about a third of those customers living in the U.S. Disney+ is currently available in the U.S., Canada and the Netherlands, and will launch in New Zealand and Australia next week. It will go live in much of Western Europe on March 31. Netflix has a major head start, with nearly 160 million subscribers worldwide.
Dan Ives, an analyst at Wedbush Securities, called the early numbers “eye-popping.” In a research note sent to clients, Ives wrote that the preliminary data suggests the company could reach its long-term subscriber goals faster than expected.
“This speaks to the 1-2 punch of success that Iger and Disney have coming out of the gate with unmatched content and a massive brand/distribution that makes the House of Mouse a legitimate streaming competitor on Day One to Netflix,” Ives wrote.
The scale of consumer demand became clear early Tuesday, when users ran into technical problems signing up and connecting to the service, even after months of preparation by Disney’s engineering team. Disney blamed the glitches on the higher-than-expected volume of people trying to use the app.
Users received error messages featuring Disney characters including Mickey Mouse and Wreck-It Ralph. Some complained on social media that they had to wait hours to speak to customer service representatives in order to try to resolve their issues.
Disney paid more than $2.5 billion to acquire BAMTech, the technology firm that provides the backbone of Disney’s streaming operations. The studio is expected to spend $1 billion on original content for Disney+ in fiscal 2020, rising to $2.5 billion in 2024.
Disney waged a massive marketing push in the weeks leading up to the debut, spanning theme parks, hotels, retail stores, ABC and FX TV channels and radio shows.
The service came to market with aggressive pricing of $6.99 a month, or $69.99 for a full-year commitment. Netflix’s most popular plan, by comparison, charges about $13 a month.
Disney also offered a steep discount to D23 members earlier this year. Additionally, customers can subscribe to a bundle including Disney+, ESPN+ and ad-supported Hulu for $12.99 a month. ESPN+ has about 3.5 million subscribers, while Hulu has 28.5 million, according to Disney.
Disney+ offers more than 7,500 episodes of TV programming and over 500 movies, plus about 25 original shows and 10 original films and specials exclusive to the service. The most anticipated of those include Jon Favreau’s “Star Wars” series “The Mandalorian,""High School Musical: The Musical: The Series” and a live-action “Lady and the Tramp.”