Disney + continues to lead the pack for new streaming services, reaching 94.9 million subscribers in the quarter ended January 2, but average revenue per user fell 28% from the previous year’s levels.
Subscriber growth was at the upper limit of analysts’ estimates. ESPN + now has 12.1 million subscribers, almost double the year ago, and Hulu has increased 30% to 39.4 million subscribers on its on-demand service and the Hulu + Live TV package. With 4 million subscribers to the live package, Hulu is now the fifth largest pay TV operator in the U.S.
The figures were highlighted in the company’s first fiscal quarter earnings report. The overall results exceeded the expectations of Wall Street analysts, despite the $ 2.6 billion impact on their theme park businesses in the quarter due to the effects of Covid-19. Streaming has become the star of the north for Disney, with investors largely rewarding its growth potential and ignoring the financial wreckage of 2020.
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Direct consumer revenue in the quarter soared 73% to $ 3.5 billion, with operating losses dropping to $ 466 million, from $ 1.1 billion a year ago. Management has predicted a break-even point in the streaming business by fiscal year 2024, but trends suggest it may go into the blue even earlier.
Average revenue per user, a key metric in the streaming business, has long been an internal concern and among some investors – hence the planned price for Disney + next month. In the last quarter of 2019, when Disney + was launched, its ARPU was $ 5.56. The inclusion of the service as a zero-cost or low-cost option for existing Hotstar subscribers has boosted its global growth, but it has also put limits on revenue, at least in the short term.
Disney gained control of Hotstar in Fox’s $ 71.3 billion deal and positioned the media power of South Asia as a key to its growth plans. The Disney Plus Hotstar package includes the Disney + offer for less than two dollars a month on a popular subscription plan, and indications are that up to a third of the 94.9 million Disney + subscribers come through Hotstar.
Hulu was at the opposite end of the ARPU spectrum, reaching $ 75.11 for the live TV package plus on-demand service, an increase of 26%. ESPN + remained relatively stable compared to the previous year at $ 4.48.
On investor day in December, Disney announced that it had reached 86.8 million Disney + subscribers. The last quarter of 2020 included the release of the Pixar film Soul on Christmas Day, what third party numbers indicated was widely seen. Disney has barely released audience details on the Disney + content, including films transferred there due to the coronavirus pandemic. Soul played in several international territories, raising more than $ 100 million and doing particularly well in China.
On the international front, Indian Premiere League cricket matches ended last November at the Disney Plus Hotstar, and Verizon’s package deal with Disney + ended after its initial launch in November 2019. Although new Disney promotions have been announced , Verizon said that about a third of customers who signed up for the original Disney package have not renewed. Despite headwinds and questions about upcoming price increases, Disney significantly increased its internal projections for its streaming business on investor day. The company now expects Disney + to be between 230 million and 260 million subscribers in 2024 (more than triple its projection in 2019), with 300 million to 350 million subscribers in all three of its main services.
Netflix continues to set the pace for all streamers, with 203.7 million global subscribers in late 2020.