Disney’s streaming show will eventually go on
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2 min read . Updated: 11 Nov 2021, 06:10 PM IST - A sharp slowdown in Disney+ growth might continue as the company fills its content slate
Disney has a lot of streaming fans. The ones on Wall Street are getting a bit antsy.
Fiscal fourth-quarter results posted late Thursday showed only 2.1 million new Disney+ subscribers—the lowest growth rate since the service was launched two years ago. That was far below the 9.3 million additions analysts were expecting. But it was also in line with a prior warning from Chief Executive Bob Chapek, who used an investment conference in September to project additions in the “low single-digit millions" range for the quarter, given the pace of new content releases plus headwinds in some key international markets.
It appears that the problem won’t be short-lived. During the company’s conference call Thursday, Chief Financial Officer Christine McCarthy noted that Disney won’t be at “our anticipated steady-state cadence of content releases" until the fourth quarter of the new fiscal year. The company therefore expects that Disney+ subscriber growth in the second half of the year will be “meaningfully higher" than in the first half, she said. Given that Wall Street’s projections have nearly 37 million new Disney+ subscribers coming in the first two quarters of the new fiscal year, the comment was taken as another warning. Disney’s share price fell nearly 5% after the results and call.
Analysts estimate that Disney+ generated about $5 billion in revenue for the just-ended fiscal year, according to Visible Alpha. That is about 7% of Disney’s total, still ranking the relatively young business below that of the company’s theme parks, cable networks and even toys in terms of size. But it is seen as a key part of Disney’s future—especially in the wake of a global pandemic that might have permanently shrunk the market for theatrical movies.
It isn’t a cheap transition, though. While the company maintains its target of as many as 260 million Disney+ subscribers by the end of fiscal 2024 (more than double its current level), it warned that fiscal 2022 will be the year of “peak losses" for the service—a year later than its original goal. The company’s overall operating profit for the just-ended quarter came in well below Wall Street’s targets as Disney continues to cope with higher costs across its segments. Meanwhile, its theme-park unit remains in recovery mode. Combined domestic and international park revenue of about $4.2 billion was about 5% ahead of analysts’ consensus expectations, but is still about 23% below the last comparable quarter before the pandemic.
Disney’s happy ending to the pandemic is still being written.
This story has been published from a wire agency feed without modifications to the text
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