Disney Reports
Disney Reports Slowing Disney+ Subscriber Growth
Company’s earnings report follows CEO Bob Chapek’s earlier warning about adding fewer new users to Disney+ than analysts expected
Pent-up demand for Disney’s theme parks has caused ticket sales to stay steady.PHOTO: JOE BURBANK/ORLANDO SENTINEL/ASSOCIATED PRESS
By
Erich Schwartzel
and
Kimberly Chin
Updated Nov. 10, 2021 4:37 pm ET
Walt Disney Co. DIS -0.38% reported slowing subscriber growth at its flagship streaming service and lackluster profit, sending shares lower in after-hours trading.
The Disney+ service added around two million subscribers in the company’s fourth quarter, bringing the total number of subscribers to 118.1 million. Analysts were expecting 125.3 million subscribers. Disney Chief Executive Bob Chapek had warned in September that it would add Disney+ subscribers in the low single-digits of millions.
“We continue to manage our [direct-to-consumer] business for the long-term,” Mr. Chapek said in the company’s earnings release Wednesday.
Disney’s shares, down 3.7% year-to-day, fell 4.6% to $166.40 in after-hours trading.
The company recorded $18.5 billion in sales, a 26% increase from the year-ago quarter, when the pandemic shut down much of the world. Results beat/missed analysts’ estimates of $18.8 billion, according to a FactSet poll.
The company’s theme parks and consumer products division had a profit of $640 million for the quarter, swinging from a loss last year. Revenue at the division—which includes its storied Walt Disney World and Disneyland resorts—doubled from a year ago to $5.45 billion.
Pent-up demand for the parks has caused ticket sales to stay steady, and the division recently introduced new technological features that allow the company to charge visitors for perks.
Overall, Disney recorded earnings of $159 million, or 9 cents a share, for the three-month period ended Oct. 2, compared with a year-ago loss of $710 million, or 39 cents a share. Adjusted earnings were 37 cents a share in the latest quarter, below analysts’ estimates of 52 cents a share.
When Covid-19 closed movie theaters and Disney theme parks, attention turned to Disney+, then a months-old service that saw its popularity surge amid stay-at-home orders. The streaming service’s early success signaled a new chapter for Disney, one focused on direct-to-consumer efforts that allowed investors to value the company on growth, as they would a tech company.
Mr. Chapek said in September that projected growth from customers in India was below expectations following the delay of Indian Premier League cricket games that air on the service. Competitors like NetflixInc. have also seen pandemic-level growth slow, as lockdowns ease and consumers find entertainment options outside of the home.
In general, Mr. Chapek said, investors should expect Disney+ growth to be more sporadic than the steady climb that the service’s early months showed. At Netflix, for instance, reports earlier this year of a slowdown in sign-ups were followed by a better-than-expected showing in the company’s most recent quarter. The streaming service added 4.4 million subscribers—or about a million more than it had forecast—in the most recent quarter on the strength of new popular shows like “Squid Game.”
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