- Disney’s combined 221.1 million subscribers tops Netflix’s 220.67 million
- Unveils 38% price hike for Disney+ service and launch of ads-backed offer
- Stock set to jump 8% when Wall Street starts trading today
Walt Disney (DIS:NYSE) bucked a streaming slowdown that has recently bedeviled Hollywood, saying overnight that Disney+ subscriptions soared ahead of expectations.
The House of Mouse reported that total Disney+ subscriptions rose to 152.1 million during the company’s third quarter (to 30 June), taking on 14.4 million new subscribers, thanks to the release of hit shows like Star Wars series Obi-Wan Kenobi and Marvel’s Ms Marvel (pictured).
Analysts had anticipated around 10 million net additions.
At the end of the quarter, Disney-owned Hulu had 46.2 million subscribers and ESPN+ had 22.8 million. Added together, this gives Disney’s direct-to-consumer subscribers to 221.1 million, beating Netflix’s (NFLX:NASDAQ) 220.67 million global viewers for its third quarter after losing almost 970,000 subscribers.
Disney chief executive Bob Chapek said: ‘We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership and significant subscriber growth at our streaming services.’
Strong demand for theme-park vacations, despite economists’ worries about an inflation-led downturn in consumer spending, powered Disney’s increase in profits. Revenue totalled $21.5 billion, a 26% increase from a year earlier, while operating profit surged 50% to $3.6 billion. Analysts had been expecting revenue of about $21 billion and profit of about $3.2 billion, according to FactSet.
GUIDANCE LOWERED FOR DISNEY+
Investors should note lowered medium-term growth guidance, with the company cutting its 2024 Disney+ subscriber range by 15 million at both the top and bottom ends. The company now expects 215 million to 245 million subscribers, versus previous guidance of between 230 million to 260 million by the end of fiscal 2024.
But subscriber base growth and news of steep price increases incoming was more than enough to encourage investors, with Disney stock up nearly 8% to $121.10 in after-hours trading, implying a good start to the stock when Wall Street reopens later today, according to pre-market data from Google Finance.
Disney plans to raise the price of the ad-free Disney+ subscription 38% from $7.99 a month to $10.99, starting 8 December in the US, with a new ads-backed service to start at the old $7.99 price.
Presumably, a similar approach will apply to the UK and global service in time. Netflix also plans to launch an ads-supported service in a bid to appeal to consumers struggling with the cost-of-living crisis.
