Here’s Why AT&T (NYSE:T) is No Match for Walt Disney (NYSE: DIS) in Superhero Streaming Wars

Thursday, August 27, 2020 | Jea Yu
Here’s Why AT&T (NYSE:T) is No Match for Walt Disney (NYSE: DIS) in Superhero Streaming Wars

The superhero streaming wars is heating up between Walt Disney’s (NYSE: DIS) Marvel Cinematic Universe (MCU) versus AT&T’s Warnermedia’s (NYSE: T) DC Extended Universe (DCEU). For those not familiar with superhero universes, Marvel Studios broke the mold along with all box office receipt records with its decade long Phase Three series of live action theatrical movie releases generating over of $22.5 billion in worldwide box office for a cost of $4.5 billion. The MCU introduced obscure superheroes like Iron Man, Thor, Black Widow and the Avengers to the mainstream and turned them (and the actors playing them) into A-list proven commodities. DC’s iconic roster of popular superheroes include well-known characters like Superman, Batman and Wonder Woman. With decades head start, you would think DC would have the upper hand, but the architect of Phase Three, Kevin Feige was the game changer. The DCEU introduced characters like the Green Lantern, Aquaman, and superhero groups like the Justice League and Suicide Squad to a mainstream audience to much less fanfare. The superhero content warheads to the next level on each other’s respective streaming network.

Marvel Wins the Box Office War

The MCU’s Avengers Endgame generated $2.8 billion in worldwide box office versus DCEU’s Justice League’s $658 million total worldwide receipts. While the MCU has clearly dominated the box office, DC set the stage for the next battle with the launch of HBO Max with plans to launch exclusive DCEU television shows on the network. A grassroots social media movement was successful in convincing management to release the Zack Snyder “cut” of the Justice League movie which is purported to have four times more content. Warnermedia has used it as a lead-in to entice more HBO Max subscribers in 2021 and a trailer was released in a unique event designed to bolster interest in the DCEU and IP properties.

DC Fandome 2020

The COVID-19 pandemic put a halt to production on all MCU shows and movie releases. This caused some of the largest comic conventions like San Diego ComicCon to go virtual to underwhelming results. DC devised its own global a two-part streaming event called DC Fandome composed of 24-hour only broadcasts to unveil upcoming projects both DCEU, HBO Max and comic books. The first event was broadcast on August 22, 2020 and second event is scheduled two weeks after. Overall, the event was successful in drumming up interest and fanfare with reveals of the upcoming Batman movie and Suicide Squad 2, along with the Snyder Cut of Justice League.

Disney+ versus HBO Max

The battle comes down to the two streaming services each representing unique content for its respective IP. The advent of Disney+ streaming service promises to usher in Phase Four with a combination of exclusive Disney+ television shows that tie-in directly with live action theatrical releases. Continuity is a key component as the Disney+ shows will utilize the same actors in the major motion pictures. Production quality will also be the same as every episode is earmarked for up to $25 million each. HBO Max is rumored to release original shows including the Green Lanterns, Justice League Dark, Strange Adventures and many more titles. However, these are just rumors. Fans are hoping for more reveals in the second part of Fandome in September. Unfortunately, there is a major problem that DC has to rectify to make any real headway in the streaming wars.

Disney’s Distribution Superhighway

During Disney’s Q2 2020 earnings conference call, the Company revealed the proverbial “checkmate” to DC + has grown its subscribers to over 60 million, well ahead of the 60-to-90 million subscriber forecasts by 2024. Disney does not reveal how many subscribers were signed up through the free annual subscription promotion through Verizon Communications (NYSE: VZ). However, Disney pulled the checkmate move by announcing plans to release their $200 million budget major motion picture “Mulan” directly to network subscribers for $29.99. In addition to Disney+, Disney also has distribution access to Hulu’s 30 million subscribers. While many subs may overlap, the reality is that Disney has masterfully harnessed the ‘network effect’ to construct its own unique distribution superhighway for which they can release premium movie theater content. They bypass On Demand’s lofty fee on cable networks and offer directly to subscribers reaping larger margins. Disney+ membership is also much cheaper at $6.99 per month.

HBO Max-imum Frustration

While HBO itself has over 32 million subscribers, only 4.1 million core subscribers activated the HBO Max app. There is confusion as to HBO Go, HBO and the HBO Max service to begin with. Also, the HBO Max service is currently not available on Roku (NASDAQ: ROKU) or Amazon Fire (NASDAQ: AMZN). This cuts distribution infinitely since Roku is the leader in streaming set-top boxes. HBO Max is available through Apple TV (NASDAQ: AAPL) and Google Chromecast (NASDAQ: GOOG) but other consumers can currently only stream HBO Max on desktops and mobile devices. This is inconvenience comes at a cost of $15.99 per month. Warnermedia has big problems with distribution and reaching audiences despite claiming to have 36 million subscribers between the two services. Until they can open up access to Roku and Amazon Fire users, they will not be able to compete in the superhero streaming wars. While hardcore fans may jump through hoops to view HBO Max superhero content, achieving true scale requires compelling mainstream viewers, which means providing easy access to the platform. As they say, if a tree falls in the woods and no one hears it, did it really fall?

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
The Walt Disney (DIS)2.5$176.02flatN/A-70.41Buy$205.38
AT&T (T)3.1$28.05flat7.42%-90.48Hold$31.01
Verizon Communications (VZ)3.3$55.78flat4.50%11.55Hold$62.31
Roku (ROKU)2.5$428.31flatN/A556.25Buy$439.91 (AMZN)2.3$3,327.59flatN/A58.00Buy$4,209.57
Apple (AAPL)2.6$145.86flat0.60%28.54Buy$155.80
Alphabet (GOOG)2.3$2,704.42flatN/A29.32Buy$3,003.21
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