When Disney first launched its Disney+ streaming service in November 2019, it did so with a long-term mindset. The transmission was presumably the future, so the company was willing to spend a lot of money to catch up with more established artists in the industry, especially Netflix, the biggest of the big kids on the block. After all: Nobody in the industry has money to burn like Disney.
Fast forward to this week, and the reveal that + has won a remarkable victory over his biggest rival, with the edge reporting that Disney+ recorded almost 8 million new subscribers during the last quarter, a period that saw Netflix loses paid users, and with them, a good part of its share price.
This is according to the release of the latest from disney quarterly earnings statement, it’s always a great day for anyone who wants to hear companies give the lightest possible analysis of their own financial fortunes. Cue new Disney CEO Bob Chapek, who also boasted that collectively, all of Disney’s streaming services now have a total of 205 million subscribers. Which sounds like a lot, until you remember that Netflix, poor humiliated Netflix, has somewhere in the neighborhood of 222 million, which even with recent dips, are consolidated into a single service, rather than being split between Disney+, Hulu, and ESPN.
Digging deeper into the report, we learn that Disney+, including domestic and international subscribers and users of Hotstar (which operates from India and offers Disney+ content to several countries in Southeast Asia where the regular service does not operate).) –a total of 137.7 million subscribers. In the US and Canada, that number is just 44.4 million, still 30 million less than Netflix sports nationwide. Which is mostly a reminder that what investors really like is not raw numbers, but growth (and managed expectations); despite lagging behind, Disney added subscribers over the past yearwhile Netflix lost something, so this can easily turn into a win for Mouse.
Similarly, the company still seems largely unconcerned with the fact that their digital offerings are not only operating at a loss, but at a growing one; Although revenue was up in the quarter, expenses were up even more, meaning Disney lost $900 million on streaming in the last three months (up from $600 million in the previous quarter).. As we said before, the company has always been up to the task versus how expensive it would be to get into streaming, but it’s a sobering reminder that even Disney can’t make money out of thin air. Among other things, the company allegedly had to eat a loss of $1 billion in fines paid because it struck a deal with a client who licensed its content, presumably so it could send that material to Disney+ instead.
The upshot of all this is that wins in the streaming world are often as much about optics as they are about hard numbers.; Disney can happily swallow losses like this because it can, well, literally afford to. Still, the company is apparently pushing for an ad-supported level of streaming (which will simultaneously boost subscriber counts). Y get some ad revenue up front) soon for the streaming service.