Can Walt Disney Really Hit US$100bn Revenue by 2024?

By Andrew Stotz | May 22, 2022

Highlights:

Over the past 9 years, Disney saw a 5% CAGR revenue growth
Streaming platform Disney+ comprises new growth engine
Fast recovery of theme parks could drive revenue rebound

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How Walt Disney actually makes money

Overview of revenue over past 3-years

Media and Entrainment remains main revenue contributor
Park & Experience segment was heavily impacted by the pandemic

Disney’s revenue continuously increased, but not exploded

In the past 9 years, revenue grew at a solid CAGR of 5.3%
The company survived the pandemic well thanks to its new streaming platform Disney+
- Revenue from streaming subscriptions partly offset the severe drop from its Park and Experience segment

But, past growth would not be enough to achieve US$100bn revenue

If we were to assume that Disney continues its stable growth rate of 5.3%, then we would end up at US$79 revenue in 2024
- If we were to assume that Disney continues its stable growth rate of 5.3%, then we would end up at US$79 revenue in 2024

However, analyst consensus expect much higher growth

Analysts expects Disney revenue to grow at 14.8% CAGR over the next 3 years
- This would result in US$102m revenue by 2024

Revenue forecast for Disney

Rising costs for affiliate content and advertising should benefit Disney’s top revenue contributor
Theater licensing could see a strong rebound as pandemic measures are lifted

Streaming platform Disney+ could be the main growth engine

Within 2 years, Disney+ contributed US$12bn in revenue, which is around 40% of Netflix’s revenue
As a comparison, Netflix started streaming services in 2007 and needed 10 years to get to US12bn in sales

Business model relies on economies of scale

To increase revenue, streaming providers must focus on increasing quantity
- Given the intense competition, it is difficult to raise prices
As of 2021, Netflix has over 200m subscribers compared to Disney + with 118m

Let’s assume Disney can grow to Netflix level in 3 years

Disney+ would need to add another 100m subscribers in 3 years
If the company can do so, it could generate around US$30bn in annual revenue

How I incorporate the story into my forecast

Its streaming platform Disney+ is the main growth driver
Reaching 220m subscribers by 2024 does not seem unrealistic

Parks and Experience segment could see a strong rebound

In total, the company operates 12 amusement parks under the Disneyland brand
- Florida, California, Tokyo, Hong Kong, Shanghai, and Paris
In 2021, it reopened all locations
- Only Chinese locations face frequent temporary shutdowns
- This could delay full recovery

Revenue forecast

Within 3 years from now, this segment should have recovered fully from COVID-19 shock

The company could indeed reach US$100bn revenue in 2024

Conclusions

We imposed two main assumptions
- Full recovery of amusement parks, hotels, and merchandise revenue by 2024
- Disney+ reaches more than 200m subscribers by 2024 which is roughly equivalent to current Netflix subscribers
Under these assumptions, the US$100bn mark is possible

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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.

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