Disney now has 9 of the 10 biggest U.S. box office openings 10:33 AM ET Fri, 4 May 2018 | 02:25

The latest big product-based (and P/E-anchored) company to put an emphasis on subscriptions is Apple. Starting in early 2016, Apple began mentioning its "services" revenues during its earnings calls. At that time, Apple's P/S ratio was 2.2 times. In the most recent earnings call earlier this week, Apple pointed out that it now has 270 million subscribers to its services (compared with 100 million Amazon Prime subscribers and 125 million Netflix subscribers). It's not just a narrative. Analysts noted that its services revenues were now 15 percent of Apple's total or $9 billion in the recent quarter.

In fact, that 15 percent number is understated. A lot of Apple's hardware revenues are for the iPhone. But iPhones get upgraded every two to four years by most — if not all — of those 270 million Apple "subscribers." CNBC's Jim Cramer correctly pointed out this week that this is a razor and razor blade model. That's a subscription.

So, what is Apple's P/S ratio today since the shift to a services model? It's 3.7 times — nearly double what it was two years ago.

The reason why investors are willing to pay more for subscription- or services-based revenues is simple: These revenues tend to be (1) sticky and (2) higher margin.

Which brings us to Disney.

Disney's biggest problem isn't a substantive one. It's a narrative one — much like Apple two years ago.

Wall Street thinks Disney sells stuff on a one-off basis. Sure, they have a big hit with "Avengers" this week, the thinking goes, but will that last? High-margin cable service subscribers are cutting the service and investors don't understand what's going to replace that in equal amounts of profits.

In my view, Disney needs to think of itself as "Disney as a service" — much like Apple now discusses services. It needs to reorient itself into knowing exactly how many global subscribers it has and how much stuff it's selling on a regular basis to those subs.

Netflix isn't getting judged by Wall Street on its profits. It's getting judged by its global subscriber count and the prospect that it can keep upping the price for its streaming service. Why shouldn't Disney be judged by its potential for amassing a huge number of global subscribers and charging them a lot over time?

If Disney understood how to reorient itself as a Disney as a service company and it projected that to Wall Street, it could have a much higher stock price. (Matthew Ball wrote an article titled "Disney as a Service" in REDEF two years ago. He discussed it as an idea that would go beyond video content. When I linked to it originally in this article, I said he only discussed it in relation to a streaming service. )

Here's how it would work.

Today, most families spend a lot of money on Disney stuff every year. Disney content and experiences appeal to all ages. The parents and older kids like to see "Avengers" and "Black Panther." The parents and younger kids like to see "Toy Story." The sports fans want to see live sports. The mature adults want to watch "The Handmaid's Tale." The kids want to watch "Tangled." The tweens and teens want the equivalent of "High School Musical." Little kids want to dress in Elsa and Anna outfits. The whole family enjoys going to Walt Disney World or on a cruise or to a Broadway show.

If I assume the typical family (with two kids) goes to a Disney Park once every three years and sees two Disney movies a year in theaters, and buys some Disney merchandise, and subscribes to the big Disney cable channels today, that household is spending about $2,000 a year or $116 a month on Disney stuff. That's a lot. And the biggest part of it is the trip to a Disney Park — something that no other streamer or traditional media company has (unless you count Comcast's Universal Studios).