Walt Disney’s (DIS) streaming service Disney+ is expanding its footprint into the Middle East and North Africa. Reuters reports that the expansion should allow the company to vie for market share in a region where the population is still young.
Low Streaming Penetration in the Middle East
Disney+ has already made its offerings available in 16 Arab countries, as it continues to customize content for the region. Part of the plan includes offering Arabic subtitles on popular content. The Middle East offers tremendous opportunity for growth as streaming penetration stands at about 10%.
According to Disney+ Director Tamim Fares, expansion into the region could not have come at a better time. The region is still in the early stages of growth, with unique opportunities for growth.
Netflix (NFLX) poses the biggest competition threat to Disney’s push for market share in the Middle East and North Africa. The streaming giant boasts over 6.8 million subscribers, followed by a local player, Starzplay, with less than 2 million subscribers. Amazon (AMZN) is also in the race for market share with 1.4 million subscribers.
According to Digital TV Research, while Disney is late to the party, it is expected to grow its customer base to 6.5 million subscribers by 2027. Netflix is expected to remain the market leader, with its base growing to 11 million. Amazon is third with 4.8 million subscribers and Starzplay at fourth with three million subscribers.
Wall Street’s Take
On June 6, Deutsche Bank analyst Bryan Kraft reiterated a Buy rating on Disney’s stock. However, Kraft lowered the stock’s price target to $130 from $191, which implies 25.9% upside potential.
The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 17 Buys and seven Holds. Walt Disney’s average price target of $147.35 implies 42.6% upside potential from current levels.
TipRanks data shows that financial bloggers are 87% Bullish on DIS, compared to the sector average of 66%.
Expansion into the Middle East and North Africa offers an exciting opportunity for Disney to grow its subscription base and strengthen revenues. In addition, the region offers solid opportunities for growth.
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