Walt Disney: Morgan Stanley's Top Pick, Experiences Segment to Drive Growth

Walt Disney, the iconic media and entertainment company, has been named a top pick by Morgan Stanley, with its experiences segment expected to drive significant growth. This article explores the factors contributing to Disney's strong performance and the role of its theme parks and resorts in the company's overall growth strategy.

Disney's theme parks and resorts have been a critical driver of the company's overall growth strategy. In 2022, the Parks, Experiences and Products segment surged by nearly 110% year-over-year, driven by surging attendance rates at Walt Disney World and Disneyland Resort, as well as new attractions like "Star Wars: Galaxy's Edge." The segment's operating income increased significantly, despite increased costs linked to staffing shortages and inflationary pressures.

Morgan Stanley analysts, led by Benjamin Swinburne, believe Disney's direct-to-consumer (DTC) strategy will fuel subscriber growth and revenue expansion. Disney+ has already amassed over 164 million subscribers, with the potential to reach 230-260 million by 2024. The firm expects Disney's DTC segment to generate $30 billion in revenue by 2024, up from $16 billion in 2021. Disney's content library, including Marvel, Star Wars, and Pixar, is expected to drive subscriber acquisition and retention.

Disney's bundling strategy, which combines Disney+, Hulu, and ESPN+, creates a comprehensive entertainment ecosystem that keeps users engaged longer. This move aims not just to attract more subscribers but also to create a sticky audience that feels compelled to stick around for more than just one show or movie. By offering a diverse range of content, Disney caters to a broader audience and strengthens its competitive position in the streaming wars.
The content library and original programming on Disney+ significantly influence its competitive position and investment value. With over 164 million global subscribers, Disney+ has rapidly grown since its launch in 2019. The platform's extensive content library, featuring iconic franchises like Marvel, Star Wars, and Pixar, attracts a wide audience. Additionally, Disney's investment in original programming, such as "The Mandalorian" and "WandaVision," has driven subscriber growth and engagement.

In conclusion, Morgan Stanley's top pick status for Walt Disney reflects the company's ability to leverage its theme parks and resorts, content creation and distribution capabilities, and bundling strategy to drive growth and create a comprehensive entertainment ecosystem. As Disney continues to invest in its direct-to-consumer segment and expand its content library, investors can expect the company to maintain its competitive edge in the streaming wars and deliver strong financial performance.