The jets kept firing for Disney Plus, which reached 103.6 million subscribers worldwide as of April 3, the company reported — although the growth was not as torrid as Wall Street hoped.
The Mouse House’s flagship streaming service packed on 8.7 million global customers in the most recent quarter (up from 94.9 million at the start of 2021). Analysts on average pegged Disney Plus coming in at 109.3 million subscribers for the quarter, per research service FactSet. At its March 9 annual shareholders meeting, the company boasted that Disney Plus had surpassed 100 million subs.
The continued but slower growth for Disney Plus came amid the service’s first price hikes: In the U.S., for example, the SVOD package went up a buck, to $7.99/month, as of March 26. But it also came on the heels of a blockbuster fourth quarter that saw Disney Plus grow by more than 20 million subscribers amid pandemic conditions.
For the sake of comparison, in Q1, Netflix gained about 4 million global streaming subscribers as it saw an even more dramatic slowdown after a COVID-fueled boom in 2020.
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Disney CEO Bob Chapek and chief financial officer Christine McCarthy emphasized that Disney Plus is still on track to reach the company’s sub target of 230 million to 260 million subscribers by the end of 2024. McCarthy noted that COVID-related disruptions in India, where Disney Plus Hotstar launched in April 2020, pushed sporting events and other sub drivers out of Disney’s fiscal Q1. Disney also made the decision to delay the Disney Plus launch in Latin American markets to later this year to better align with marquee sports events.
While international expansion will be the big driver of Disney Plus gains, Chapek said there is still plenty of consumers to reach in the U.S. with Disney’s growing bundle of streamers that include ESPN Plus and Hulu.
“We see opportunity to have the bundle in the U.S. be even larger,” he said. “The metrics, all the performance factors are extraordinarily positive.”
McCarthy said there’s been no significant uptick in subscriber churn even with the price hike for Disney Plus.
“We seem to be fairly resilient, which makes us feel relatively bullish going forward,” she said.
During the quarter, the Disney Plus average monthly revenue per paid subscriber continued to drop in the period: That was $3.99 for the quarter ended April 3, down 29% from the year prior (and just a hair off the prior quarter’s $4.03). Disney noted that the global numbers include Disney Plus Hotstar, available in India and Indonesia, which carries a significantly lower ARPU than Disney Plus in other markets.
Disney’s direct-to-consumer revenue for the quarter increased 59% to $4.0 billion. The segment cut its operating loss to $290 million (versus $805 million a year prior), thanks to improved results at Hulu and to a lesser extent at ESPN Plus.
ESPN Plus customers increased 75% year over year, to 13.8 million. ESPN Plus looks to benefit from new sports rights deals as Disney is demanding flexibility to window content across linear and streaming platforms. On Thursday, Disney confirmed new long-term pacts with Major League baseball and the La Liga soccer league.
“We’ve gotten a lot of flexibility to take our programming to direct to consumer platforms,” Chapek said. “We plan on being fairly aggressive in that way. One of the advantages of the Walt Disney Co. and sports is that we have so many ways to reach our consumer base. The leagues understand that and we certainly do as well.”
Hulu subscribers increased 30%, to 41.6 million overall, at the end of the period, Disney’s fiscal year Q2. Of those, 3.8 million take the live TV with SVOD bundle, an increase of about 500,000 year over year — but a sequential decline of around 200,000.
Hulu’s fundamentals have improved in recent quarters. The platform offers Disney a great deal of targeted advertising inventory that can be sold at higher prices than linear blurbs. “The most important driver [for Hulu] is its addressable advertising strength. That continues to be a real upside,” McCarthy said.
Disney Plus, the streaming home for movies from Pixar, Marvel, Lucasfilm and Disney as well as a slate of original series and films, had the wind at its back in 2020 with the global pandemic fueling consumer demand for the service.
Last December, Disney issued a dramatic upward revision on its forecast for Disney Plus, projecting 230 million to 260 million total paid subscribers by September 2024. Two years ago, the company told Wall Street it expected 60 million-90 million Disney Plus customers by that time.
