DISNEY+ FAILS TO REACH PROJECTED SUBSCRIBER GROWTH IN Q1

Disney reported 103 million subscribers as of the beginning of April for its streaming service as  Disney+ has shown signs of slowed growth as the service scores well below the projection figure of 110 million.  “We’re pleased to see more encouraging signs of recovery across our businesses, and we remain focused on ramping up our operations while also fueling long-term growth for the Company,” Bob Chapek, chief executive officer of The Walt Disney Company, said.

The company reported revenue of $15.6 billion during the first quarter of the year, below the average $15.87 billion estimated by Yahoo! Finance analysts. The company also posted earnings per share of 79 cents, well above the projected 27 cents per share. Its direct-to-consumer revenue for the quarter went up by 59% to $4.0 billion, with the segment cutting its operating loss to $290 million, versus over $800 million from the previous year. Its stocks dropped more than 4% in after-hours trading. Disney’s $15.61 billion in revenue for the quarter fell short of expectations, and its 103.6 million streaming subscribers missed estimates. 

Disney+’s monthly average revenue per user continued to drop to $3.99 per subscriber, a $5.63 decrease from a year ago. However, its other streaming services all saw their average revenue from subscribers grow, particularly Hulu’s live TV service. Among Disney’s other streaming services, ESPN+ now has 13.8 million subs, while Hulu has 37.8 million for its on-demand service and an additional 3.8 million for its Hulu + Live TV option. As has been the case, Disney’s parks revenue took another hit with its theme parks remaining closed or operating at reduced capacity. Disneyland in California finally reopened at the end of April. Revenues for the quarter decreased 44% to $3.2 billion, and segment operating results decreased $1.2 billion to a loss of $406 million.

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. Hulu subscribers increased 30%, to 41.6 million overall, at the end of the period, Disney’s fiscal year Q2. 

Analysts projected the company would report earnings per share of 27 cents and $15.87 billion in revenue. Chapek and chief financial officer Christine McCarthy emphasized that Disney Plus would still be able to reach the company’s sub target of 230 million to 260 million subscribers by the end of 2024. “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.”