Competition in the streaming market is intensifying.
(Photo: IMAGO/AFLO)
Burbank Entertainment giant Walt Disney has seen rapid growth with its streaming services in the most recent fiscal quarter. The on-demand services Disney +, Hulu and ESPN + together had a total of 221 million subscriptions at the end of June, as the group announced on Wednesday after the US stock market closed. Disney has thus caught up with the previous market leader Netflix, which recently lost customers and also ended the past quarter with 221 million user accounts. “We had an excellent quarter,” said Disney CEO Bob Chapek.
Disney+ and ESPN+ in particular flourished with annual growth rates of 31 and 53 percent, respectively, to a good 152 million and almost 23 million subscribers, respectively. Disney’s third streaming service Hulu increased the number of subscriptions by 8 percent to 46 million users. The Disney+ streaming service, which was only launched in November 2019 as a Netflix hunter, gained 14.4 million customers in three months – significantly more than experts expected. With the Star Wars series Obi-Wan Kenobi and Marvel’s Ms. Marvel” he landed two big hits.
Disney immediately used the strong demand to introduce strong price increases. For example, the price for the standard ad-free subscription to Disney+ for customers in the US will increase by $3 to $10.99 per month on December 8th. However, like Netflix, Disney wants to introduce a cheaper version with commercial breaks. This offer is said to cost $7.99 a month – as much as the ad-free subscription used to be. With Hulu, the price goes up by $1 to $2 per month, depending on the subscription model. ESPN+ also recently announced a price increase in the US.
However, the company is lowering its forecast for long-term subscriber growth for Disney+. The total number of Disney+ customers will be between 215 million and 245 million by the end of September 2024, Disney announced on Wednesday. That’s down from the 230 million to 260 million Disney previously forecast.
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Great price pressure in the streaming business
The reason for the reduced expectations is the loss of streaming rights for Indian Premier League cricket matches. However, the streaming unit remains committed to making a profit for the first time in fiscal 2024, said CFO Christine McCarthy.
In addition to Netflix and Disney, Amazon and Apple, among others, are also fighting for the favor of viewers who regularly want to watch new series and films at home with high investments in their streaming platforms. As a result, Disney’s streaming operations are still losing money, reporting a loss of $1.1 billion for the quarter just ended. This weighed on the media and entertainment division, whose profit fell 32 percent to almost $1.4 billion.
In addition to the film business with the streaming offer and the amusement parks, Disney also owns cruise ships and various television channels. Total revenue for the quarter rose 26 percent year-on-year to $21.5 billion, beating analysts’ expectations of $20.96 billion polled by Refinitiv. The clear increase was also due to the amusement parks, whose operating result more than doubled. Profit rose 53 percent to $1.4 billion.
The quarterly figures significantly exceeded analysts’ expectations. The stock reacted after hours with a price increase of more than 4 percent. Disney recently had a difficult time on Wall Street – the share has been down 28 percent since the beginning of the year.
More: The once rapid growth of the streaming pioneer Netflix is over. Chasers like Disney are getting stronger. Three reasons why this is – and what Netflix can do about it.