Disney+ now has 130 million subscribers, significantly more than expected

Entertainment giant Disney had nearly 130 million subscribers to its Disney+ online video service as of early January, well above expectations. Disney+ gained 11.7 million subscribers in a quarter, to 129.8 million, according to a press release from the group on Wednesday, well above the 124.6 that the consensus of analysts established by FactSet anticipated.

The group also managed to increase the average revenue per Disney+ subscriber by 9%. Revenue from online video services, which include Disney+, Hulu and ESPN+, grew 34% year over year. However, activity remains in the red and its operating loss widened to $600 million in the quarter.

Disney is playing big in the online video segment, which needs to offer a new growth engine as traditional television is drying up. While still significantly higher than streaming, conventional TV revenues have been stagnant for more than a year.

Still on the content side, Disney benefited from the success of several movies, first of all Spider-Man: No Way Home, co-produced with Sony, has grossed $1.77 billion at the box office since its release in mid-December. During the first quarter of its staggered fiscal year (October to September), the Burbank, California, company also benefited from the resumption of its amusement parks, many of which had been closed for all or part of the same period in 2020.

The invoicing of the branch thus doubled, with the considerable increase in the number of entries but also in the average cost per visitor. All businesses combined, revenue was up 34% year-over-year to $21.8 billion in the first quarter of its fiscal year. The profit was $1.1 billion.

Earnings per share, analyzed by analysts, came in at $1.06, much better than the 73 cents expected. The market seemed to welcome this launch. In electronic trading after the Wall Street close, Disney shares gained 7.29%.

Increasingly tough competition

General results of the entertainment empire “speaks volumes about Disney’s strong brands and ability to outperform the competition in an increasingly crowded digital media marketplace”said Paul Verna, an analyst at Insider Intelligence.

The figure of Disney contrasts with that of Netflix. The veteran has almost twice as many subscribers, but only earned 8.2 million paid accounts during the period, to end the year at 221 million.

“Disney left to give Netflix a hard time”warns Tuna Amobi, an analyst at CFRA. “They are on a faster trajectory and that is not a surprise. […] Disney has a lot of content, big names and global franchises.”.

Launched in November 2019, just over two years ago, Disney+ is all about growth and not aiming to break even until 2024. Disney plans to dedicate a $22 billion endowment to its content (excluding sports) in 2022, with Series galore and more than one new movie a week in the works. And although the service continues to gain many subscribers in the United States, unlike Netflix, which has almost saturated the market, the battle is now taking place internationally, where the number of paid accounts has increased by 40% in a year. .

Like Amazon Prime Video, Disney is modeled after Netflix and has started work on as many as 340 original shows produced outside the United States, which should be available within the next year and a half to two years, it said on Wednesday. CEO Bob Chapek. .

“We have just created a new entity to guide the development of this content, to maximize the chances of global success”explained the leader. Already possessing an unrivaled catalogue, with Marvel, Pixar or Star Wars, Disney dreams of a foreign success in the squid game.

The Burbank, California, giant is currently present in only around 60 countries, compared to Netflix’s more than 190, but aims to add 100 more by 2023. “This is where you will see the updated subscription numbers” compared to Netflix, anticipate Tuna Amobi.

India, a symbol of this fierce struggle to conquer new territories, where Netflix, Disney and Amazon are vying for a share of this market, had between 70 and 80 million paying subscribers to an online video service in one country last year. of 1.4 billion people.

Netflix did not hesitate to lower its prices there, at the end of December, to remain competitive, contrary to its current pricing policy, while Disney relies on its subsidiary Hotstar, leader in the Indian market but whose revenue per subscriber exceeds 80%. lower than the rest of the countries where Disney + operates.

Although they now have 27 million subscribers outside the United States (73.8 in total), HBO and its HBO Max service don’t seem to have the same firepower. His planned marriage to Discovery, its Discovery+ platform and its 20 million accounts, due to end in the spring, should transform the group.

As for Paramount + (47 million subscribers) or Peacock (24.5 million users, all in the United States), or even Apple TV + (20 million), they are, for the moment, only second violins. “If you don’t have the resources to finance investments in content, it will be very difficult to compete with Disney+, Netflix and Amazon”believe Tuna Amobi.

However, “the idea is more of each platform taking a fair share of a growing pie”, explains the analyst. The firm Digital TV Research estimates that online video services will have 1.7 billion subscribers worldwide in 2026, including 910 million for the five main US platforms.

“There is more competition than ever”Netflix co-CEO Reed Hastings admitted when the group reported the results in mid-January. “But we’ve had Hulu and Amazon (as competitors) for 14 years..For him, as traditional television disappears, “within 10 to 20 years”, “Streaming will become all entertainment”.

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