[Asia Economy Reporter Jeong Hyunjin] The number of subscribers to streaming services owned by Walt Disney, such as Disney Plus and ESPN Plus, has surpassed Netflix. While the streaming industry is facing difficulties due to recession concerns and rising inflation, Disney alone is showing an upward trend. However, it expects subscriber growth to be slower than anticipated in the future and has decided to raise service prices.
According to CNBC and other outlets on the 10th (local time), Disney announced in its Q3 fiscal 2022 earnings report (April 3 to July 2) that Disney Plus added 14.4 million subscribers, reaching a total of 152.1 million. This figure significantly exceeded the market forecast of 147.76 million. Including other streaming services owned by Disney, such as ESPN Plus and Hulu, the total number of Disney streaming subscribers reached 221.1 million.
Considering Netflix recently reported 220 million subscribers, Disney has surpassed it. This milestone comes five years after Disney launched Disney Plus in 2017. Netflix experienced its first-ever subscriber decline in Q1 and continued to lose subscribers in Q2 but is expected to see a slight recovery in Q3.
However, Disney has lowered its fiscal 2024 targets. Initially, Disney projected Disney Plus subscribers for fiscal 2024 to be between 230 million and 260 million at the end of 2020, but it has adjusted this down by 15 million to a range of 215 million to 245 million. It also noted subscriber decline issues, such as the expiration of Indian cricket broadcasting rights for Disney Plus Hotstar, which targets the Asian market.
Disney also faces the challenge of improving profitability in its streaming business. Although subscribers have increased, profitability remains poor, resulting in losses. This quarter, the streaming services segment recorded a net loss of $1.1 billion. As demand for cheaper services increased in the U.S. and Canada, the average revenue per Disney Plus user decreased by 5% during the same period.
Accordingly, Disney announced it will raise the monthly service price of Disney Plus starting in December. The ad-free service will increase by 38% to $10.99, while the ad-supported service will be priced at $7.99, which is currently the price for the ad-free service. Bob Chapek, Disney’s CEO, said he does not expect the price change to lead to a significant loss in streaming subscribers and believes "the value justifies the price increase."
Beyond streaming services, Disney’s parks, experiences, and products segment revenue rose 72% to $7.4 billion. This increase was driven by growing tourism demand. Disney’s total revenue was $21.5 billion, and earnings per share were $1.09, both significantly exceeding market expectations.
Following the earnings announcement, Disney’s stock price rose nearly 7% in after-hours trading.
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