Disney+ U.S. subscription revenue on track to surpass $4 billion by 2022: report

The House of Mouse is moving along at a good pace to challenge the current king of streaming -- Netflix -- quicker than originally expected.

According to a new report by eMarketer, Disney+ is on track to surpass $4 billion in U.S.  subscription revenue by 2022, helping to solidify the Walt Disney Company as the No. 2 player in the streaming market with a nearly equal market share owned by Netflix.

Representatives for Disney and Netflix declined to comment.

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The eMarketer revenue forecast estimates that Disney+ U.S. subscription revenues will reach $1.94 billion by the end of this year. In addition, Disney's recently announced $1 price increase next year could potentially add another billion in revenues in each of the following two years, amounting to a total of $4.23 billion by 2022.

Disney+ currently represents 26.5% of Disney's overall over-the-top streaming (OTT) subscription revenues, with Hulu and ESPN+ accounting for 67.6% and 5.8%, respectively.

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During the media giant's Investor Day Presentation earlier this month, the company announced that Disney+ has surpassed 86.8 million subscribers since its launch in November 2019. Disney said it expects that number to grow to somewhere between 230 million to 260 million subscribers by 2024.

The eMarketer report suggests that Hulu will help cement The Walt Disney Company's position as the No. 2 streaming player. Disney is expected to earn $12.36 billion in U.S. OTT subscription revenue by 2022 compared to $12.95 billion for Netflix.

Hulu now has a total of 38.8 million subscribers, with its cord-cutting Hulu + Live TV option reaching 4 million paying subscribers, the fifth-largest pay-TV provider overall. Hulu is expected to have between 50 million and 60 million subscribers by the end of fiscal 2024.

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Eric Haggstrom, eMarketer forecasting analyst at Insider Intelligence, said that Disney's initial subscriber growth was driven by hit shows like "The Mandalorian" and Disney's vast library as well as key distribution deals and a massive marketing push.

“It’s expected to continue to grow off that base as [Disney] ramps up content releases and brings some movies straight to the service, instead of a theatrical release in some cases.”

Disney noted it would spend between $14 million and $16 million on streaming content between now and 2024, with the company announcing over 50 new projects in the pipeline, including 10 new Marvel series, 10 new "Star Wars" series, 15 Disney live-action, Disney Animation, and Pixar series and 15 all-new Disney live-action, Disney Animation, and Pixar feature films.

However, Haggstrom acknowledged that the streaming landscape continues to expand, with total revenues for the sector expected to jump 29.9% next year to $38.15 billion and climb another 19.4% in 2022.

“The good news for dominant player Netflix is that while new services like Disney+ have had successful launches, many consumers have been simply stacking services together,” Haggstrom said.

Netflix reported that its streaming service had surpassed 195.15 million global subscribers as of its third-quarter in October, up 23.3% year-over-year but below Wall Street expectations.

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In a letter to shareholders, Netflix said it expects subscriber growth to return to pre-COVID levels in 2021.

“We continue to view quarter-to-quarter fluctuations in paid net adds as not that meaningful in the context of the long-run adoption of internet entertainment, which we believe is still early and should provide us with many years of strong future growth as we continue to improve our service," Netflix wrote.

The company expects six million paid net adds in the fourth quarter, compared to 8.8 million a year ago.