Appearing to buck streaming giants’ downward trend in the last few weeks, Disney+ announced that it had picked up 7.9 million new subscribers in the last quarter, taking its total user base to 44.4 million.
Direct-to-consumer revenue rose 23 per cent to $4.9bn, while the average monthly revenue per paid subscriber up nine per cent to $4.35 on a global basis, with the biggest increase coming from Disney+’s Hotstar.
Not only did these figures beat Wall Street estimates, but it also sat apart from Netflix’s mighty losses last month.
As TMT analyst for PP Foresight Paolo Pescatore said the results represented a “huge sigh of a relief for Disney”.
“For now, take-up for its direct-to-consumer services like Disney+ remains robust and will continue to do so. Growth will continue as Disney+ is not widely available globally as Netflix. Launches into new markets, partnerships with key local telcos will help fuel subscribers’, he explained.
This was echoed by Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown. She said: “The streaming service has a lot more room to run before bumping up against the side of the tanks, unlike rival Netflix.
“That’s a large reason behind the better performance, and the strong addition to the subscriber base comes despite competition in the streaming space being about as high-octane as a Disney hero-on-villain fight. That’s testament to Disney’s unrivalled slate of content.”
However, it’s not all fairytales for Disney, with some analysts questioning the sustainability of Disney+’s model.
Higher production, marketing and technology costs meant operating losses for Direct-to-Consumer widened significantly to $887m.
There were also higher programming and production costs in the traditional cable business, meaning operating profit for the division as a whole fell 32 per cent to $1.9bn.
There appears to be a fine balance to be struck between churning out new content to get the subscribers in, and not breaking the bank and eating into profits to do it.