Disney+ added fewer-than-expected subscribers in the most recent fiscal quarter, in the latest sign that the pandemic-driven boom in streaming may be starting to wane .
All eyes are on Disney's streaming numbers, which have taken hold as the company's top priority. Disney+ hit 103.6 million subscribers worldwide in its second fiscal quarter, up from the 100 million it announced in March. But that was less than the 109 million predicted by analysts on FactSet.
The disclosure comes after Netflix in April reported adding a disappointing 4 million global subscribers in the most recent quarter.
Stay-at-home orders drove an influx of subscribers to streaming services at the beginning of the pandemic with movie theaters and other out-of-home entertainment options largely closed. The streaming landscape has also become increasingly crowded with competitors including HBO Max, Peacock and Paramount+.
Disney has continued to introduce attention-grabbing shows to the subscription platform, including Marvel's "The Falcon and the Winter Soldier," adding to a list of hits such as "WandaVision" and "The Mandalorian."
Hulu, which has non-Disney branded content including shows from FX and movies from Searchlight Pictures, had 41.6 million subscribers during the quarter, which ended April 3. The more adult-oriented Hulu served as the streaming home of Searchlight's "Nomadland," which won the best picture Oscar in April.
Including 13.8 million subs from ESPN+, the company's total streaming subscriber count hit 159 million, below the 162 million analysts expected.
Disney reported second quarter profit of $912 million, nearly double net income from the same time a year ago. Its earnings of 79 cents a share significantly beat analyst expectations of 26 cents a share. Revenue fell 13% to $15.61 billion, missing Wall Street estimates of $15.86 billion.
The earnings beat was attributed to better-than-expected results in cable and broadcasting and direct-to-consumer businesses.
Cable and broadcasting profits benefited from a decrease in programming and production costs along with higher revenue from broadcasting affiliates. Operating income at the segment grew 15% to $2.85 billion.
Streaming lost less money than expected, reflecting improved results at Hulu.
Direct-to-consumer revenues for the quarter increased 59% to $4 billion, while operating losses decreased from $805 million to $290 million.
The company's revival will depend heavily on the return of the parks. Disneyland opened at the end of last month, with restrictions, in a major milestone for the company as Disney tries to put the devastating public health crisis behind it.
The resort finally began welcoming guests through its gates with attendance capped at 25% of capacity. Guests and employees must wear masks, and people who don't live together must maintain physical distance in queues and on rides. Parades and fireworks shows have been scrapped, and costumed characters such as Mickey Mouse and Goofy aren't giving out hugs, though they can pose for pictures.
Revenues from parks, experiences and products declined 58% year-over-year to $3.17 billion, while the segment swung to a loss of $406 million, compared to profit of $756 million a year earlier.
Walt Disney Co. went a year without its biggest movies opening in theaters and selling tickets for Disneyland in Anaheim. During that time, the clear focus of the Burbank-based entertainment giant became its streaming services, Disney+, Hulu and ESPN.
With the California parks finally open and blockbusters such as "Black Widow" on the way, Disney investors may soon see what the company looks like when all its business are able to function as the COVID-19 pandemic inches toward its end.
Even as movie theaters reopen across the country, Disney isn't putting all its chips on the theatrical market. Instead, it's putting big budget movies such as "Cruella," starring Emma Stone, and "Black Widow," featuring Scarlett Johansson, on Disney+ for a $30 fee on top of its $7.99 monthly subscription cost. Pixar's "Luca" will go straight to the service for no additional charge.
However, Disney CEO Bob Chapek said in a call with analysts that Disney will give movie theaters a 45-day exclusive window for the upcoming 20th Century Studios movie "Free Guy" and Marvel's "Shang-Chi and the Legend of the Ten Rings."
Disney on Thursday said its comedy adventure "Jungle Cruise," starring Dwayne Johnson, will hit Disney+ for $30 through its Premier Access strategy, suggesting the company is keeping its options open as it decides how to release new movies. Before the pandemic and Disney+, movie theater owners saw Disney as the most reliable provider of major theatrical releases.
