In strong growth on streaming, Disney increases the pressure on Netflix

Disney thumbs its nose at Netflix, whose growth is stalling. The entertainment giant has recorded a new jump in subscribers to its Disney+ streaming platform, the flagship of its new strategy.

To read: For the first time in ten years, Netflix is ​​losing subscribers

Disney+ reached 137.7 million subscribers, up 33% year-on-year. Between late December and early April, the Burbank (California) group gained 7.9 million net subscribers to its subscription video service.

The figure contrasts with that of its big competitor Netflix, which lost 200,000 accounts over the same period, when the platform had not seen a decline for more than ten years.

Disney expects Disney+ subscribers to increase in the April-September period compared to the first quarter of its staggered fiscal year, which was October-March, Chief Financial Officer Christine McCarthy said. For its part, Netflix expects to lose two million subscribers in the current quarter compared to the previous one.

Investments in content

Within the video, cinema and television branch, online video services remain in the red and posted an operating loss of 887 million dollars (843.15 million euros) over the quarter.

To stimulate the growth of its streaming platforms in particular, the entertainment company plans to devote a total of 32 billion dollars (30.4 billion euros) to content, including sports, during its 2022 fiscal year.

Read also: Disney opens hostilities in online video

Adding the platforms ESPN+, which specializes in sports, and Hulu, which is more adult-oriented than Disney+, the group had more than 205 million subscriptions at the start of April, even if some users subscribe to a formula which offers the three services at a advantageous total price (20 dollars per month against 28, in the United States).

Chief Executive Bob Chapek said Disney is still aiming for a range of 230-260 million Disney+ subscribers by fiscal year 2024 (completed at the end of September 2024), which could put it ahead of Netflix, which currently has 221 million accounts. He also expects to see streaming become profitable by then.

A streaming version of ESPN in the works

To accelerate its growth, the platform is counting on the launch of an offer with advertising by the end of the year in the United States, and in 2023 internationally.

Bob Chapek also indicated that Disney was already thinking of offering a streaming version of ESPN which contains all the programs of the sports television network, and not just a limited selection as is the case for ESPN +. However, he clarified that the transition would not take place in the short term, because Disney still derives substantial revenue from subscriptions to ESPN via traditional cable and satellite television in the United States.

In total, the company’s profit amounted to 597 million dollars (567.4 million euros), down 46% and very much below analysts’ expectations. Disney shares fell more than 3% in electronic trading after the close of Wall Street.

The resurgence of the pandemic could weigh on the results

In the other major activity of the group, the parks, Disney more than doubled its turnover over one year (+109%). It was driven by attendance at Disneyland Paris, which was partially offset by a drop in Hong Kong and Shanghai.

Spending per visitor is 40% higher than its level in the same quarter of 2019, i.e. before the pandemic.

From January to March, the parks generated an operating result almost equivalent to that of video, cinema and television, while they posted a heavy loss last year, due to restrictions linked to the coronavirus. Financial director Christine McCarthy nevertheless warned that the resurgence of the pandemic and the confinements could cut operating profit for the current quarter by 350 million dollars (332.7 million euros).

The results of the parks as well as television, video and cinema “prove that we are in a category apart”, declared Bob Chapek. In total, turnover was up 23% over one year, to 19.2 billion dollars (18.25 billion euros).

Leave a Comment