Disney Streaming Subscriptions Come Up Short

Disney+ added fewer subscribers than expected in the most recent fiscal quarter, the latest sign that the pandemic-driven boom in streaming may be starting to wane, The L-A Times reports.

All eyes are on Disney’s streaming numbers, which have emerged as the company’s top priority. Disney+ hit 103.6 million subscribers worldwide in its second quarter, up from the 100 million it announced in March. But that was lower than the 109 million predicted by analysts on FactSet.

Disney executives were upbeat about the numbers when speaking to analysts after second-quarter earnings. Disney+ added 8.7 million subscribers to the 94.9 million it had at the end of the first quarter. Chief Financial Officer Christine McCarthy said the growth came despite Disney+ not launching in any major new markets. The app also raised prices, including a $1-a-month boost in the U.S.

Chief Executive Bob Chapek reiterated that Disney+ is expected to hit 230 million to 260 million subscribers in 2024. The price increase did not drive any noticeable increase in churn, or people leaving the service, Chapek said. “We seem to be fairly resilient to those price increases,” he said.

Wall Street Journal Graphic

Stay-at-home orders drove an influx of subscribers to streaming services at the beginning of the COVID-19 pandemic, with movie theaters and other out-of-home entertainment options largely closed. The streaming landscape has become increasingly crowded with competitors, including HBO Max, Peacock and Paramount+.

Disney-owned Hulu, which has non-Disney-branded content including shows from FX and movies from Searchlight Pictures (both owned by Disney), had 41.6 million subscribers during the quarter, which ended April 3.

Including 13.8 million subscriptions for ESPN+, the company’s total streaming subscriber count hit 159 million, slightly below the 162 million analysts expected.

Disney reported second-quarter net income of $912 million, nearly double the profit from the same time last year. Its adjusted earnings of 79 cents a share significantly beat analyst expectations of 26 cents a share. Revenue fell 13% to $15.61 billion, missing Wall Street estimates of $15.86 billion.

The earnings strength was attributed to better-than-expected results in cable and broadcasting and direct-to-consumer businesses.

Cable and broadcasting profits benefited from a decrease in programming and production costs along with higher revenue from broadcasting affiliates. Operating income at the segment grew 15%, to $2.85 billion.

The company’s revival will depend heavily on the return of its theme parks. Disneyland opened at the end of last month, with restrictions, in a major milestone for the company as Disney tries to put the devastating public health crisis behind it.

Revenues from parks, experiences and products declined 44% year over year to $3.17 billion, while the segment swung to a loss of $406 million, compared with a profit of $756 million a year earlier, because of closures.