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Recently Walt Disney (NYSE:DIS) and Netflix (NASDAQ:NFLX) entered a deal to create a multiple live-action series based on Marvel TV's four most popular characters and one mini-series exclusively to be shown on Netflix's streaming-video service. Under this deal, Disney will provide Netflix with a live action series developed by Marvel featuring its four popular characters: Daredevil, Jessica Jones, Iron Fist, and Luke Cage. Netflix's video streaming service will show around 60 episodes in total in 2015, featuring the four superheroes, and the mini-series will be called "the Defender."

This deal provides a good platform to deliver Marvel's specialty of rich storytelling content, brand, and characters. Disney has been promoting the comic book company's lesser-known heroes since it bought Marvel in 2009. Netflix's strategy of focusing more on the original content is also helping Disney release a video series for these comic characters that have a solid potential, but they aren't popular enough for a movie. Also, Netflix seems to be more cost effective compared to pricier shows for Disney's ABC, which require big budgets for visual and special effects. The company doesn't need to rely on advertisers since Netflix already has a mass audience. This will be a good opportunity for Disney to promote Marvel's content on Netflix, which already has a subscriber base of 40 million. This deal will also come with a production cost sharing agreement with Netflix, which will release some cost pressure from Disney.

The deal also makes perfect sense for Netflix as it can feature additional original content from a high profile producer. Netflix's original content such as House of Cards, Arrested Development, and Orange is the New Black has already gained popularity and has attracted numerous viewers.

Largest expansion in the history of the Animal Kingdom

Disney has been heavily investing in its theme park segment, which is one of its major revenue generators. Disney is planning to bring an 'Avatar' based theme attraction named 'Avatar Land' to its Animal Kingdom at the Walt Disney World Resort. The attraction will include a Pandora-like walk through, boat rides through a bioluminescent jungle, live shows, and probably a ride through the sky on the Banshee. Disney is taking a huge step to bring the imaginary Pandora to life, giving visitors an opportunity to experience and embark on a new journey through the Avatar world. This will be the largest expansion in the history of Animal Kingdom, and it is one of the most strongly anticipated theme park attractions after Comcast's (NASDAQ:CMCSA) 'The Wizarding World of Harry Potter' in Orlando.

The construction of Avatar Land is expected to start in the next year. The movie 'Avatar' successfully grossed more than $2.7 billion at the box office worldwide and has a huge fan following. When this movie was released, many fans expressed that they were depressed because living in Pandora was just a part of the movie.

It is announced that there will be three more sequels to the Avatar movie, and the first will be launched in 2016. I expect that with the new movie, fans' desire to experience life on Pandora will continue to increase. This new theme park will be able to cater to those fans, as its opening is expected in the next couple of years, close to the launch of the sequel.

I assume that the new attraction will create a magical feel like the Avatar movie, which will help Disney boost the number of visitors to its theme park, helping the company improve its overall growth. In 2013, the revenue from the theme park segment increased 9% to $14.1 billion. Once the attraction opens, I anticipate that Disney's theme park segment's revenue growth will further accelerate.

Disney is likely to face competition from Comcast's expansion of 'The Wizarding World of Harry Potter' in Orlando. Comcast has been aggressively investing in its NBC Universal division, mainly in the theme park segment. The company has spent approximately $807 million over the first nine months and expects to reach $1 billion by end of this year. 'The Wizarding World of Harry Potter' first opened in 2010, since then it has been a huge revenue generator for Comcast. I assume Comcast will be successful in attracting more visitors since Harry Potter's stories and movies are famous among youngsters and have many fans across the globe. The attraction will open in the spring of next year. The new attraction will give visitors an opportunity to experience Diagon Alley as well as the magical feel of Hogwarts and Hogsmeade, which the attraction brings to life. Along with the expansion of 'The Wizarding World of Harry Potter,' Comcast has many other attractions that successfully attract visitors.


Summing up, I think the new Avatar Land will bolster Disney's theme park growth by attracting more visitors. The theme park segment will continue to be one of Disney's major revenue generators in the coming years. Also the deal with Netflix provides a strong platform for Disney's Marvel to feature its series on the biggest online streaming player. This will help Disney strengthen its studio entertainment segment. I assume that these fundamentals will boost Disney's overall growth, which will positively impact its earnings.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Will Disney Benefit From Marvel?