For years, Disney has insisted that the future of the company lies in streaming. Billions have been poured into Disney+, Hulu, ESPN+, international ventures, exclusive originals, and the infrastructure required to compete directly with Netflix. Yet despite becoming one of the world’s largest streaming companies, Disney’s stock has gone essentially nowhere.
Now, one Wall Street analyst is arguing something almost unthinkable: Disney should abandon the streaming business altogether.
According to a new report from The Hollywood Reporter, Wells Fargo analyst Steven Cahall believes Disney could unlock enormous shareholder value by shutting down its direct-to-consumer streaming ambitions and instead licensing its films and television shows to competitors like Netflix. Cahall estimates such a move could increase Disney’s stock price by as much as 40%.
It’s a dramatic proposal, but it’s also one that raises an uncomfortable question Disney executives have struggled to answer for years.
Has streaming actually been worth it?
Disney Built a Streaming Empire, But Investors Haven’t Been Rewarded
On paper, Disney’s streaming business looks impressive.
The company owns Disney+, Hulu, and ESPN+, operates the Movies Anywhere platform, and also holds a significant stake in JioHotstar overseas. Combined, Disney serves hundreds of millions of subscribers worldwide and is generally viewed as Netflix’s closest competitor.
But investors haven’t seen those accomplishments translate into meaningful stock appreciation.
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Disney shares have largely traded sideways for the better part of five years despite enormous investments in streaming technology, exclusive programming, and subscriber growth.
That disconnect is exactly what Cahall believes Disney needs to address.
Rather than spending billions operating streaming platforms, he argues Disney should return to what made the company successful in the first place: creating entertainment.
Let Netflix Handle Distribution
Cahall’s proposal is surprisingly simple.
Disney would continue producing movies and television series featuring franchises like Marvel, Star Wars, Pixar, and its legendary animated library. Instead of paying to host that content itself, however, Disney would license those projects to streaming services willing to pay premium prices.
Netflix would be the obvious candidate.
The logos for Netflix and Disney – Netflix, Disney
The arrangement would eliminate much of Disney’s streaming overhead while creating predictable licensing revenue similar to the model many studios relied upon before the streaming wars began.
Rather than competing with Netflix, Disney would profit from Netflix’s subscriber base.
The Real Gold Mine Isn’t New Movies
One of the more fascinating aspects of Cahall’s analysis involves Disney’s back catalog.
He estimates Disney’s Pay-1 licensing window—roughly the first 18 months after a theatrical release—could generate nearly $4 billion annually.
Even more significant is Disney’s older library.
According to Cahall, Disney’s Pay-2 catalog—which includes classic animated films and older franchise entries—could ultimately be worth as much as $15 billion because of the enormous value locked inside Disney’s “vault.”
The Evil Queen in Snow White and the Seven Dwarfs (1937), Walt Disney Productions
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That’s where Disney arguably has advantages no other studio can match.
The company owns timeless classics like Snow White and the Seven Dwarfs, Cinderella, Beauty and the Beast, and The Lion King. It also controls decades of Star Wars, Marvel, Pixar, and the extensive library it acquired through the purchase of 20th Century Fox.
Those films continue generating demand decades after release.
Instead of using them primarily to entice Disney+ subscriptions, Cahall believes Disney could simply license them and collect billions in revenue.
Streaming Has Come With Massive Costs
Disney executives have repeatedly celebrated Disney+ subscriber milestones over the past several years.
What receives far less attention is how expensive streaming has become.
Maintaining global streaming platforms requires enormous investments in technology, customer support, marketing, bandwidth, original programming, and constant content production simply to keep subscribers from canceling.
Logos for YouTube, Disney+, Paramount+, HBO Max, Peacock, Apple TV, and Netflix – YouTube; Disney; Paramount; HBO Max; Peacock; Apple TV; Netflix
The streaming business is also brutally competitive.
Netflix, Amazon Prime Video, Apple TV+, Max, Paramount+, Peacock, Tubi, Pluto TV, and numerous international services are all fighting for consumers’ increasingly limited entertainment budgets.
Winning subscribers has proven far more difficult than simply making great movies.
Josh D’Amaro May Already Be Reconsidering Disney’s Strategy
Cahall also suggested Disney CEO Josh D’Amaro may already be reevaluating the company’s streaming strategy.
One recent example cited is Disney’s decision to reverse course on eliminating the standalone Hulu app.
Josh D’Amaro by Cinderella Castle – Disney
Originally, Disney planned to fully integrate Hulu into Disney+, but that strategy has since softened, suggesting leadership may be more willing to rethink previous assumptions than initially believed.
Whether that eventually extends to licensing content remains to be seen.
Could Disney Actually Walk Away?
While Cahall’s proposal sounds radical today, it’s worth remembering that Disney spent decades licensing its content before launching Disney+.
In many ways, abandoning streaming would actually represent a return to Disney’s historical business model. Of course, such a move would also mean admitting that the streaming wars ultimately weren’t worth fighting.
(L-R): Boba Fett (Temuera Morrison) and the Mandalorian (Pedro Pascal) in Lucasfilm’s THE BOOK OF BOBA FETT, exclusively on Disney+. ©.
That would be an extraordinary reversal after years of executives insisting direct-to-consumer streaming represented Disney’s future.
Still, Wall Street ultimately cares about shareholder returns more than corporate pride.
If Disney’s stock continues to stagnate while Netflix and other competitors thrive, investors may become increasingly receptive to ideas that once sounded impossible.
Moana in Moana (2016), Walt Disney Studios
For now, Disney appears committed to remaining in the streaming business. But Cahall’s proposal underscores growing frustration among investors who have watched Disney spend billions building streaming platforms without seeing the corresponding gains in shareholder value.
If licensing beloved classics to Netflix truly offers significantly higher returns than keeping them locked behind Disney+, it’s a debate Disney shareholders may soon begin asking much louder.
Do you think Disney will ever abandon streaming? Sound off and let us know!
