Disney signed up 12 million subscribers to its flagship streaming service in the most recent quarter, doubling its customer base from a year ago and outpacing rivals such as Netflix.
The company reached 116 million subscribers in the quarter ending on July 3rd, double the 58 million it had drawn a year ago, and above the 115 million Wall Street analysts were looking for.
In comparison, Netflix added just 1.5 million subscribers during the same quarter, losing some 430,000 customers in the US and Canada and fuelling concerns that it is vulnerable to new competition.
Bob Chapek, Disney chief executive, said the company was in a “strong position” despite the “ongoing challenges of the pandemic”. Shares in Disney jumped 5.3 per cent in after-hours trade. The stock is roughly flat on the year, missing out on a broader market rally.
Disney has rapidly signed up subscribers to its streaming service, helped by a cheaper monthly price and the launch of its Hotstar platform in India.
However, subscribers pay far less money on average than rival services such as Netflix. The average revenue per Disney Plus user fell 10 per cent from a year ago to $4.16 in the quarter, with India now making up nearly 40 per cent of all subscriptions.
Netflix senior management has dismissed any threat from Disney and its peers. Reed Hastings, co-chief executive, last month told investors that he had not seen an impact from Disney on Netflix’s subscriber growth.
"Does HBO or Disney have a differential impact compared to the past? We're not seeing that in the [DATA]," he said. "That gives us comfort."
Disney’s theme parks offered another bright spot during the quarter, with locations across the US, China and France reopening, helping the business swing to an operating profit after heavy losses last year.
The company’s parks and consumer products business made $356 million in operating income during the quarter on $4.3 billion in revenue.
As the pandemic has dragged on, Disney and other Hollywood studios have experimented with releasing big movies to their streaming services alongside cinemas – a move that sparked a lawsuit by actor Scarlett Johansson last month.
Chapek defended Disney’s decision on Thursday, telling investors the company’s film release strategy reflected a “very uncertain world” and Black Widow’s distribution helped the movie “reach the broadest audience”.
During the quarter, Disney released films to stream including Cruella, a reimagined live-action origin story for 101 Dalmatians, and Luca, a coming-of-age Pixar movie set in Italy.
However, Disney is still losing money from streaming as it invests heavily in content and technology to boost sign-ups.
Disney’s direct to consumer business unit, which includes Disney Plus, Hulu and ESPN Plus, posted an operating loss of $293 million on $4.3 billion in revenue.
In total, Disney posted net income of $923 million on $17 billion in revenue, with sales up 45 per cent from a year ago when it was battered by the pandemic. – Copyright The Financial Times Limited 2021
