Here are the key numbers:

• Earnings per share: 32 cents adjusted
• Revenue: $16.25 billion vs $15.9 billion expected, according to Refinitiv

Disney earnings miss across the board with slowing streaming growth

Wed, Nov 10 2021

Disney reported fiscal fourth-quarter earnings on Wednesday after-the-bell. The company missed Wall Street estimates across the board, sending the stock down more than 4% in after-hours trading.
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• Earnings per share: 37 cents adj. vs 51 cents expected, according to Refinitiv
• Revenue: $18.53 billion vs $18.79 billion expected, according to Refinitiv

The company added 2.1 million Disney+ subscribers to reach a total of 118.1 million, in line with Disney’s estimates. During the Goldman Sachs Communacopia Conference in September, CEO Bob Chapek said the segment’s growth had “hit some headwinds” and that Disney expected to add “low single-digit millions” of streaming subscribers in the fourth quarter.

However, Wall Street seemed more bullish than Chapek. StreetAccount estimated the company would report 125.4 million total Disney+ subscribers as of the fourth quarter, suggesting 9.4 million new subscribers since the third quarter.

Average monthly revenue per subscriber for Disney+ came in at $4.12, down 9% year over year. The company attributed the dip to a higher mix of Disney+ Hotstar subscribers compared with the prior-year quarter.

Disney’s average revenue per user has shrunk in recent quarters because of the lower price points for its Disney+ and Hotstar bundle in Indonesia and India. The service has lower average monthly revenue per paid subscriber than traditional Disney+ in other markets, pulling down the overall average for the quarter.

Overall, Disney reported 179 million subscriptions across Disney+, ESPN+ and Hulu at the end of the fourth quarter. Revenue for the direct-to-consumer segments increased 38% to $4.6 billion. Average monthly revenue per paid subscriber rose slightly for ESPN+ and Hulu.


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Disney highlights value of its streaming bundle by increasing price of ESPN+ 43% to $9.99 per month

Fri, Jul 15 2022

Disney is increasing the price of its sports streaming service ESPN+ to $9.99 per month, a 43% increase.

The previous price of ESPN+ had been $6.99 per month. The increase will kick in on Aug. 23. An annual subscription to ESPN+ will jump from $69.99 to $99.99.

It’s unusual for the price of a streaming service price to rise more than 40% in a single increase. Disney’s last two ESPN+ price rises have been for just $1 per month, first in 2020 and then last July.

The dramatic rate hike accomplishes several goals for Disney. Assuming customers stick with the service, it should help Disney boost revenue for its streaming products, which still lose money for the company.

Second, Disney hopes it will remind subscribers there’s a lot of new and valuable content on the service, including live National Football League games, exclusive Grand Slam tennis matches from Wimbledon and the Australian Open, PGA Tour events, and National Hockey League games. Increasing the price of ESPN+ will also help Disney pay for its most recent renewal of “Monday Night Football,” which cost the company $2.6 billion per year. As part of that deal, Disney has the right to simulcast “Monday Night Football” on ESPN+ when the company chooses.

Third, and perhaps most important for the company’s go-forward strategy, Disney isn’t changing the price of its bundle, which will remain $13.99 per month. It consists of Disney+, advertising-supported Hulu and ESPN+.


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Hulu Drives More Subscriber Growth for Disney Than Disney+

July 18, 2022

Hulu has emerged as Walt Disney Co.’s fastest-growing U.S. streaming service, just as the company loads up on more adult-focused entertainment in a bid to expand its reach to a wider variety of viewers.

New subscriptions to Hulu have outpaced those of Disney’s flagship streaming platform, Disney+, in 18 of the past 24 months, and total new subscriptions to Hulu have exceeded those to Disney+ in each of the last six quarters, according to data from subscriber-measurement firm Antenna.

Hulu’s subscriber gains come as Disney leadership is under pressure from investors to keep up the momentum in Disney+ subscriber growth. Disney Chief Executive Bob Chapek has set a target of signing up between 230 million and 260 million Disney+ subscribers and achieving profitability for the streaming business by September 2024, a goal described as unrealistic by some shareholders.

Some analysts and investors have described streaming as a drag on Disney’s share price, which has fallen by nearly 40% this year amid a broader pullback in media stocks. Disney+ has 137.7 million global subscribers as of the most recent quarter’s end. Hulu’s streaming-only service has 41.4 million subscribers, while Hulu Live, Disney’s $70-a-month live-TV streaming product, has 4.1 million. The streaming segment overall lost $887 million in the most recent quarter, and its losses have totaled more than $6 billion since the launch of Disney+.

On Friday, Disney said that beginning in late August, the monthly subscription cost for ESPN+ would rise from $6.99 to $9.99, or from $69.99 annually to $99.99. A Disney spokesman said the price hike reflects the higher value and scope of the service, which has benefited from Disney’s increased investment in sports rights.

Disney anticipates that the ESPN+ price increase will make the Disney bundle — which ranges in cost from $14 to $20 a month, depending on whether ads are shown — more attractive, according to a person familiar with the matter.

The Antenna data, prepared exclusively for The Wall Street Journal, indicate that after Disney+ exploded out of the gate following its November 2019 launch, gaining nearly 100 million subscribers in its first five quarters of operation, its growth has leveled off as the service has locked in its core fan base.

Subscribers to the stand-alone Hulu service are less loyal than Disney+ subscribers, the data show, and more likely to cancel their subscriptions than those who subscribe to Disney’s streaming bundle, which includes both services and the sports-focused ESPN+. In June, the latest month for which data was available, 4.7% of Hulu subscribers canceled their subscriptions, compared with just 2.5% of bundle subscribers and 3.83% of Disney+ subscribers, Antenna found.

“They did a great job of teeing up those hard-core Disney fans,” said Jonathan Carson, Antenna’s chief executive. “But there’s a broader and longer-term upside for Hulu, because it has general market appeal, while Disney+ has a much more specialized fan base.”

A Disney spokeswoman said the trends shown in the Antenna data are broadly accurate. Despite Hulu’s accelerated growth, Disney+ is still seeing strong subscriber growth, she said.

Antenna analyzed data from spending apps and inbox-management software for about 5 million American consumers to glean trends around streaming video consumption.

Disney+ is home to Disney’s core franchises, including Marvel Studios superhero films and series, Star Wars epics, children’s animated fare, as well as nature films from National Geographic and former 21st Century Fox titles such as “The Simpsons” and “Avatar.”

Hulu, by contrast, airs more adult-oriented shows such as this year’s corporate-scandal drama “The Dropout” and “Pam & Tommy,” a series about the release of the sex tape that actress Pamela Anderson made with heavy metal drummer Tommy Lee. In the company’s most recent earnings call, Mr. Chapek, the CEO, highlighted the appeal of both shows, plus the reality series “The Kardashians” and “Dancing With the Stars.”

Disney said in its most recent quarterly earnings call that it plans to spend $32 billion producing content this year, about one-third of which will be spent on sports rights, while a “meaningful amount” will be dedicated to general entertainment content.

“It’s obviously a balancing act, but we believe that great content is going to drive our subs, and those subs then in scale will drive our profitability,” Mr. Chapek said on the May earnings call. Mr. Chapek noted that nearly 50% of Disney+ subscribers are childless, underlining the need to produce shows and films that appeal to adults across all of the company’s platforms.

Mr. Chapek faces a tough decision over the next year and a half, including whether or not Disney should buy out the 33% stake in Hulu owned by Comcast Corp.’s NBCUniversal. Hulu’s rapid growth makes the decision even harder.

Disney acquired a controlling stake in Hulu as part of its $72 billion purchase of most of 21st Century Fox’s entertainment assets in 2019. At the time, then-CEO Robert Iger struck a deal with Comcast that gives Disney the right, starting in January 2024, to buy out NBCUniversal’s stake in Hulu at fair market value, with a floor price of $27.5 billion.

But Hulu’s subscriber growth and Disney’s investments in the platform have made Hulu more valuable, likely raising the potential cost to buy out NBC’s stake, said Morgan Stanley analyst Benjamin Swinburne, although streaming businesses such as Netflix Inc. have lost value in recent months as investors question the viability of the streaming business model.

Owning 100% of Hulu would allow Disney to “truly integrate” the service into its suite of streaming offerings by making it a tile on the Disney+ app, rather than available only as its own stand-alone app, which would help reduce subscriber churn, Mr. Swinburne said.

While stand-alone Hulu subscriptions have risen as a proportion of total Disney streaming subscriptions, the Antenna data show, the share represented by Disney+ and Disney bundle sign-ups has fallen. The bundle represented 8% of gross subscriber additions in June, down from its peak of 15% in September 2021; stand-alone Disney+ subscriptions represented 34% of new sign-ups in June, down from a monthly peak of 56% in July 2020.

Some recent decisions by the company have allowed Disney to book more Disney+ subscribers using its other streaming platforms as a gateway. Late last year, for example, Disney rolled roughly 2 million Hulu Live subscribers into its streaming bundle as part of a price increase. Disney reported these converted subscriptions as new Disney+ customers in its first-quarter financial results this year, even though none of them had signed up for Disney+ of their own accord.

Some of these Hulu Live subscribers who gained Disney+ subscriptions, like Kevin Shimkus, a retired accountant from Pinehurst, N.C., who watches the nightly news and home-and-gardening reality shows with his wife, have no interest in Pixar animated movies, Star Wars content, or other Disney+ offerings. Mr. Shimkus, who represents the kind of general-entertainment viewer that Mr. Chapek has said he is eager to win over, canceled his subscription and opted for the lower-priced YouTube TV instead.

“I would never pay for a Disney+ subscription,” he says. “I just don’t see the value.”