Some hard figures.
$6B/year investment – perhaps over an initial 5-yr forecast, = $30B over 5-yrs.
Y1 would presumably include seed money for setup costs and a fair amount of opening content creation. Then the next 4-years $6B/yr to increase content catalogue. So they need to cover a flat $30B over the 5-yrs.
$10/mth ($120/yr) = 50M yearly subscribers to cover this amount.
Business plan scenario...
Nov 2019
- initial US release first. Gain at least 20M subs in first 3-mths, growing over next few years to 50M (Netflix has ~65M in US currently.)
Feb/Mar 2020
- next launch in other English-language countries (CA, UK, AU, NZ, +maybe some others). ^Same subs numbers as above.
Feb/Mar 2021
- launch in a great many other countries. Gain say half the subs of each of the above two.
By 5-year end of 2025, they'd hold a sustained 125M subscribers (even with some subscriber 'churn'). Thus they’ve achieved 125M yrly subbers, with 50M/yr subscribers to cover costs, and another 75M/yr subbers to make gross profit on, which at $120/year x 75M subbers = $9B/yr.
Even instead of the 75M, if say they only get two-thirds (50M) or even circa half that (35M) amount of subbers above and beyond base 50M break-even, they're still covering the investment and making a healthy margin each and every year. And subscription prices will likely rise a bit over time as they all do (inflation!), which provided they control spending increases, makes more potential.
Now add-in Arcade subs, which is likely a more niche audience for, with maybe a third of these numbers at half the income ($5/mth), that'd add $2B/yr. Then add say $2B/yr ATV+ channels fees (~30%), News+ fees $1B/yr (~50% fee was the figure banded around), and potentially more stuff later.
That's a healthy $14B/yr additional gross profit potential, which is currently around a QUARTER of the company's current profit; thus effectively they're increasing profits by 25%/year!
So yes, the figures certainly do stack-up, provided they cover the bases and do them well. We'll see if subscription fatigue has any affect.
