Street Calls of the Week
Investing.com -- Disney’s U.S. streaming business has stalled, moving the spotlight to international markets as the company’s best chance for growth.
In its recent note, Bernstein said Disney+ added no subscribers in the U.S. last quarter, with management guiding only for a “modest increase compared to Q3.” Most of the near-term growth is expected to come from Hulu via its Charter deal, rather than organic sign-ups.
This plateau contrasts sharply with the international opportunity. Netflix derives nearly 70% of its subscriptions from outside the U.S., supported by a steady pipeline of local-language shows such as “Squid Game” and “Money Heist.”
Disney (NYSE:DIS), however, remains far behind. In many developed markets its penetration is below 20%, and in some cases under 10%.
Bernstein analysts note that Disney has underinvested in localized content, with only about 10% of Disney+ titles in foreign languages.
Hulu fares slightly better, at around 20–25%, but both trail Netflix, where more than half the catalog is foreign-language programming. The correlation between Netflix’s international penetration and its commitment to local production highlights the scale of Disney’s missed opportunity.
“Without content tailored to local interests, Disney+ penetration will face an uninspiring ceiling,” analyst Laurent Yoon said in the note.
Cost control has also limited Disney’s global push. After peaking at roughly $30 billion in 2022, content spend has fallen to an estimated $24 billion this year, with only about $14 billion allocated to general entertainment.
Netflix (NASDAQ:NFLX), by comparison, is expected to spend $18 billion in 2025, the majority on non-sports programming. Yoon cautions that reallocating budgets to protect near-term margins risks slowing subscriber growth, which “remains a foundation for long-term performance”.
Management has already signaled a push to broaden Hulu internationally, replacing the Star tile on Disney+ in overseas markets with the Hulu brand.
But analysts argue that branding alone won’t be enough. To capture meaningful market share abroad, Disney must commit to a larger slate of local productions across Europe, Asia, and Latin America.
Bernstein maintains an Outperform rating on Disney, with a $129 price target.
In conclusion, while Disney+ has established itself as a global platform, its “long-term success hinges on a sustained investment in localized and original content,” Yoon wrote.
Re-accelerating spending may weigh on margins in the short term, but it is essential for the company to compete effectively in the crowded streaming market.