Wells Fargo analyst Steven Cahall has put a radical option in front of Disney: exit streaming, license the company’s content to the highest bidders, and let Netflix, Amazon, Apple, YouTube, and everyone else absorb the costs of distribution.
Cahall estimates that a return to Disney’s old wholesale model could generate more than $15 billion in annual licensing revenue by fiscal 2028 and add roughly 40% to Disney’s share price. His argument lands because Disney’s stock has lost nearly half its value over the past five years while the company has spent heavily building a global direct-to-consumer operation.
I don’t think Disney should abandon Disney+.
But I do think Cahall has finally put a price on the question Disney needs to answer: How much value does owning the customer create, and does that value exceed what Disney could earn by selling its content to every distributor that needs it?
That’s the real debate.
Disney+ has strategic value. Disney’s durable power sits in the characters, franchises, brands, and experiences behind it. The service earns its place only when it makes those assets more valuable.
Hollywood Mistook Owning the Pipe for Owning the Advantage
Hollywood mistook owning the pipe for owning the advantage.
That assumption drove billions into streaming services designed to replicate Netflix, often without asking what business each company was uniquely equipped to win.
Netflix built its power around distribution. Global scale spreads content spending across a massive subscriber base. High viewing frequency generates data. Data improves recommendations. Better recommendations support retention, advertising, and pricing. Each part of the system strengthens the next.
Disney’s economic engine works differently.
A film creates a character. The character supports a series. The series sells merchandise. The merch strengthens affinity. That affinity drives theatrical demand, park attendance, cruise bookings, games, live experiences, and decades of repeat spending.
Disney monetizes stories across time, formats, and physical locations. Few entertainment companies can turn two hours of viewing into a multigenerational consumer relationship.
Disney+ contributes to that system. It doesn’t define it.
Streaming exclusivity carries an opportunity cost. Every title reserved for Disney+ gives up the licensing check another distributor might write. The decision makes sense when exclusivity produces greater subscription, advertising, data, and downstream value.
It becomes expensive when the content sits behind Disney’s walls without generating enough incremental engagement to justify the restriction.
Disney+ Is the Front Door. Experiences Own the Register
Disney has already signaled how it sees Disney+ evolving.
The service is becoming the digital front door to the broader company, connecting entertainment, ESPN, advertising, personalization, commerce, games, and Experiences. Disney wants to identify the fan, understand the fan’s behavior, and move that person toward higher-value transactions across the ecosystem.
That creates benefits a licensing-only business can’t fully capture.
A third-party distributor can tell Disney how many people watched a movie. Disney+ can connect viewing to a household identity, an advertising profile, an ESPN relationship, a merchandise purchase, or a vacation decision.
The front door becomes valuable when people keep walking through it.
Disney+ gives the company a place to manage, measure, and monetize the fan relationship, with the potential to drive lower churn, higher average revenue per user, stronger ad targeting, deeper ESPN engagement, better commerce conversion, and greater lifetime customer value.
Cahall’s note doesn’t erase that value, but it gives the value a hurdle rate.
Disney can no longer defend exclusivity with a vague promise that owning the customer will matter someday. Management needs to show how the direct relationship translates into measurable economics across the company.
How many Disney+ viewers become park guests?
How much does personalization improve merchandise conversion?
How much incremental advertising yield comes from connected identity?
How much does ESPN engagement increase when Disney owns the interface?
How much franchise value does Disney+ create between theatrical releases?
Those answers determine whether Disney+ operates as a strategic control point or an expensive private screening room.
Cahall Put a Shadow Price on the Front Door
Cahall’s math is getting attention because the numbers are large enough to force the debate.
Sony reportedly receives more than $1 billion annually from Netflix for its pay-one movie output deal. Cahall argues that Disney’s box-office scale could support nearly $4 billion in global pay-one revenue. Add later windows and Disney’s library, and Wells Fargo sees annual licensing revenue exceeding $15 billion.
That estimate may prove aggressive. The strategic principle still holds.
Every piece of exclusive content has a market price.
Disney currently pays that price by declining outside licensing revenue. In return, it receives some combination of subscriber acquisition, retention, engagement, advertising inventory, customer data, and downstream franchise activity.
Management’s job is to determine which side creates more enterprise value.
That calculation will vary by title.
A new Marvel release may drive subscriptions, merchandise, theatrical demand, and park relevance. Exclusivity could create substantial system value.
A deep-library procedural or a mature ABC series may generate little incremental Disney+ engagement while carrying significant licensing demand elsewhere.
Treating both titles the same sacrifices economics for consistency.
Exclusivity should function as a capital-allocation decision. Disney has too much content, too many brands, and too many potential buyers to operate under a single rule.
Disney’s Power Comes From Compounding IP
Netflix compounds distribution.
Disney compounds IP.
Netflix benefits when viewing consolidates inside its service. Disney benefits when a character becomes valuable across several businesses and stays valuable across generations.
Disney owns assets Netflix can rent but can’t easily recreate: Mickey Mouse, the Disney Princess portfolio, Pixar, Marvel, Star Wars, Avatar, The Simpsons, FX, National Geographic, and a century of family entertainment.
That portfolio combines global brand power with creative assets competitors can rent but can’t readily recreate. Disney can place the same intellectual property in theaters, streaming, retail, games, hotels, ships, and physical attractions. Each successful expression reinforces the others.
The parks make the model visible.
Disney’s Experiences division is doing the company’s heavy lifting. Parks turn IP into high-margin, repeatable spending, and Disney plans to invest $60 billion in Experiences over a decade. Content now gets judged partly by its ability to drive attendance, merchandise, and global franchise growth.
Streaming supports that engine by keeping characters active between releases, introducing franchises to new audiences, and giving Disney a daily customer touchpoint.
Its strategic role grows when engagement grows.
Disney’s streaming services have reached profitability, but stable profitability alone doesn’t establish dominance. Netflix continues to command more consumer time, while Disney’s services largely operate as extensions of the larger Disney machine.
That position can produce enormous value. It just needs to produce more value than the licensing revenue Disney leaves behind.
D’Amaro Should License With a Scalpel
Cahall frames the choice as Disney+ or licensing. The better strategy is to keep the customer relationship while treating exclusivity as a tool, not a religion.
Josh D’Amaro should approach distribution title by title, window by window, and territory by territory. He should protect exclusivity where it demonstrably increases total customer value and license aggressively where outside demand exceeds the strategic benefit of keeping content inside Disney+.
That approach could include:
- Preserving exclusivity for current franchise releases that materially drive acquisition, retention, merchandise, or Experiences demand
- Licensing mature library titles that generate limited incremental engagement on Disney+
- Using rotating windows to create scarcity without permanently withholding content from outside buyers
- Selling selected titles to Netflix and other distributors as marketing for Disney’s broader franchise economy
- Building performance metrics that connect streaming behavior to advertising, commerce, ESPN, parks, cruises, and games
- Evaluating content based on total enterprise return rather than the performance of one segment
Disney has already begun treating streaming, sports, parks, and commerce as parts of the same customer relationship strategy. D’Amaro’s background makes him a logical operator for this phase. He understands pricing, yield, physical experiences, and the conversion of IP into repeat spending.
His challenge now involves allocating content with the same discipline Disney applies to park capacity and cruise inventory.
Some assets become more valuable through scarcity. Others become more valuable through reach.
The library needs both.
The Streaming Wars Take
Cahall’s argument doesn’t prove Disney should exit streaming. It establishes what Disney+ now has to prove.
Disney has positioned the service as the front door to the entire company. It can identify customers, personalize relationships, support ESPN, improve advertising, and move fans toward merchandise, games, parks, cruises, and other higher-value transactions.
That’s strategically valuable.
Disney’s biggest asset was never the front door. The value lives throughout the house.
The company’s enduring power comes from creating intellectual property that can earn money across businesses, generations, territories, and distributors. Disney+ strengthens that power when it increases engagement and total customer value. Blanket exclusivity weakens it when content could earn more elsewhere without sacrificing meaningful downstream economics.
Cahall’s licensing estimate gives Disney+ a shadow price.
D’Amaro doesn’t need to choose between shutting down Disney+ and sending the entire library to Netflix. He needs to determine where exclusivity creates leverage and where it leaves money on the table.
That’ll require more licensing, sharper windowing, and less attachment to the idea that every Disney asset belongs permanently inside a Disney-owned service.
Disney+ can remain the front door to Disney. It’s Josh D’Amaro’s job to keep it from becoming the vault.
The Streaming Wars is intentionally ad-free
We don’t run display ads. Not because we can’t, but because we don’t believe in them.
They interrupt the reading experience. They cheapen the work. And they burn advertisers’ money on impressions nobody actually wants.
So we chose a different model.
We say the things people in this industry are already thinking but don’t say out loud. We connect the dots beyond the headline and focus on explaining why things matter to the people working in this business.
If you believe industry coverage can exist without clutter and interruption, you can support it here → SUPPORT TSW.
Support is optional. But it directly funds research and continued coverage — and helps prove this model can work.
Support TSW →
