The Walt Disney Company posted a significant slowdown in subscriber sign-ups at its flagship streaming service in the most recent quarter, ending two years of strong growth that had helped the company survive Covid-19 and expand its media dominance into the home, reports The Wall Street Journal.
Disney+ added just over two million subscribers in the fourth quarter ending Oct. 2, the company said, bringing its total to 118.1 million. Analysts had expected this quarter’s total to come to 125.3 million. During the previous quarter, Disney+ had added more than 12 million new subscribers.
Disney Chief Executive Bob Chapek said the company was managing its direct-to-consumer business “for the long term, not quarter to quarter.” The service is still on track to reach previous guidance of between 230 million and 260 million paid Disney+ subscribers globally by the end of fiscal 2024, he said.
While Disney’s streaming service suffered, Disney’s parks posted a surge in year-over-year revenue as attractions reopened and Covid-19 vaccinations proliferated, reflecting a shift in consumer habits over the past several months as the global economy recovers from the pandemic.
Across Disney’s balance sheet, a world eager to return to pre-pandemic normalcy can be seen. Theme park revenue was up 99%. Growth in the company’s media division came in part because of advertising revenue attached to the return of live sports, the company said. And box-office grosses in the quarter came from four new movies, including “Shang-Chi and the Legend of the Ten Rings,” whereas the previous year’s quarter had included only one.
Some analysts have questioned whether Disney should expand into more adult-oriented programming to draw in new subscribers. Mr. Chapek said the executive team is targeting different demographics, but are focused on gaining ground among preschool viewers.
In an attempt to boost growth, Disney recently introduced a discounted offer for Disney+, a promotion that charges $1.99 for the first month, followed by the regular rate of $7.99. A promotional “Disney+ Day” is also scheduled for later this week to highlight new programming coming to the service, as well as to commemorate its launch in several overseas markets that are key to hitting its forecast figures.
At its other streaming services, ESPN+ subscribers reached 17.1 million, up from the 14.9 million the company reported in August and above analyst estimates. Total Hulu subscriptions rose roughly two million from 43.8 million in the third quarter, below analyst estimates.
Overall, Disney recorded fourth-quarter earnings of $159 million, or 9 cents a share, compared with a year-ago loss of $710 million, or 39 cents a share. Adjusted earnings were 37 cents a share in the latest quarter, below analysts’ estimates of 52 cents a share.
The company’s theme parks and consumer products division had a profit of $640 million for the quarter, swinging from a loss last year. Revenue at the division—which includes its storied Walt Disney World and Disneyland resorts—doubled from a year ago to $5.45 billion. Hourly wage increases among parks workers and inflationary costs on some supplies are contributing to some rising expenses in the division, Ms. McCarthy said.
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