Disney + streaming subscriber growth slows, reaching 118 million worldwide

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U.S. entertainment giant Disney said on Wednesday its flagship streaming service grew more slowly than expected in the recently ended quarter as the pandemic headwinds began to bite.

Disney + has reached 118 million subscribers worldwide, but analysts had predicted millions more would sign up, resulting in a failure that caused the entertainment giant’s share price in after-market retail to decline.

Bob Chapek, Disney Company’s chief executive, told analysts on a conference call that the two-year-old service faced some pandemic headwinds to launch new shows and movies.

“Obviously we are only in the second year of Disney + launching and the hunger for content for the service is exceptional,” he said.

“And if that happens at the same time as a pandemic and you have to stop production, that’s not a good combination,” he added.

Rival Netflix has promised to significantly increase its range of original programming after suffering from pandemic production delays.

Disappointing growth at Disney + came as the company tried to get back on its feet in its travel and theme park business that has suffered from the pandemic.

“We have made great strides in reopening our stores while taking significant and innovative steps in the direct-to-consumer space and in our parks, particularly with our popular new offerings from Disney Genie and Magic Key,” said Chapek.

Effects on parks and films

Disney also planned a big promotion on Friday to celebrate the two year anniversary of Disney + launching this week.

Even more worrying for investors, the average monthly revenue per Disney + subscriber fell 9 percent year-over-year to $ 4.12.

In its earnings announcement, the group attributed the decline to cheaper subscriptions in some markets such as India and Indonesia.

It also noted that Disney + is facing cost increases in terms of content production, marketing, and technology.

Disney shares fell four percent by Wednesday’s close of trading.

However, the hugely popular streaming service is benefiting from its parent company’s controversial strategy of simultaneously releasing some films in theaters and online, with additional costs for the platform’s subscribers.

Following Mulan in 2020, Black Widow and Jungle Cruise were released this summer to the great displeasure of theaters and stars like Scarlett Johansson, who criticized a loss of earnings for them.

“When they released blockbuster films on the streaming service at the same time as the cinemas, it was worth the price of admission,” said Enderle Group’s tech analyst Rob Enderle of Disney.

“But this driver has evaporated.”

Disney has recently changed course and let movies play in theaters for a while before making it onto the streaming service, the analyst said.

“If they force you to go back to the theater, Disney + will be redundant,” said Enderle.

“At some point, Disney is going to have to make a decision whether to prefer the theaters or their services, and it’s a tough decision.”

In total, Disney’s platforms (Disney +, ESPN + and Hulu) have 179 million subscriptions and generated sales of 4.6 billion US dollars (approx. 34.268 billion rupees).

The park and merchandising business doubled its sales to $ 5.5 billion (approximately Rs 40,973 billion) thanks to the eagerly anticipated reopening of all theme parks around the world.

“We are still affected by reduced operating capacity” due to health restrictions, Disney stated in its statement.

Disney also expected the cost of making films and running its other business to rise as inflationary pressures felt across the economy.

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