Streaming Wars Entering A New Phase

The battle for consumer eyeballs has intensified in recent years, particularly with the onset of the Covid-19 pandemic. However, with the impact of the pandemic on daily lives receding, a new era in the streaming wars may be beginning, reports Barron's.

Walt Disney ’s subscriber growth has been slowing in recent quarters but it managed to turn the tide in its fiscal first quarter.

Disney added 11.8 million new subscribers in the quarter, beating expectations as well as Netflix ’s 8.3 million net adds. There is an opportunity for Disney to beat its streaming rival in the current quarter too, as Netflix projected 2.5 million new subscribers, well below expectations.

Amazon ’s decision to raise the price of Prime for the first time since 2018 could also have an impact on subscriber dynamics, perhaps further opening the door for Disney.

But is this a changing of the guard? Disney CEO Bob Chapek said he doesn’t anticipate subscriber growth to necessarily be linear, but he expects stronger growth in the second half of the fiscal year, citing new market launches and fresh original content.

Looking more closely, however, Disney worked a bit of magic worthy of Aladdin’s Genie. The company’s strategic decision to include Disney+ and ESPN+ as part of a Hulu Live subscription accounted for two million of the 4.1 million new domestic subscribers.

Disney’s Theme Parks, Streaming Subscribers Lift Results

Disney beat analysts’ expectations for fiscal first-quarter earnings and revenue, driven by a burst in spending at its theme parks and growth in Disney+ streaming service subscribers. Its shares, which had lost about 25% over the past year, were up more than 7% in premarket trading Thursday.

Disney’s theme parks, which have largely reopened across the globe, generated $7.2 billion in revenue—more than double the year-ago total—with almost $2.5 billion in operating profit. Analysts had expected a 77% recovery, with $6.4 billion in revenue and $1.4 billion in operating profit.

Chapek said theme parks had their second-best quarter ever. Disney raised ticket prices early in the quarter, and more than one-third of domestic park guests purchased services that help visitors avoid waiting in lines for rides.

Disney+ added 11.7 million subscribers during the quarter for a total of 129.8 million, Hulu added 1.5 million subscribers, and ESPN+ added 4.2 million. Disney+ hits included the animated feature Encanto and the three-part documentary The Beatles: Get Back.

What’s Next: Wall Street expects Disney+ subscriber growth to accelerate in the second half of its 2022 fiscal year, because of new original content and expansion into more countries. Disney is still aiming for between 230 million and 260 million Disney+ subscribers by the end of fiscal 2024.