Disney Shows Netflix How It’s Done

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What's going on?

Disney announced late on Wednesday that it now has more subscribers than Netflix.

What does this mean?

Netflix hemorrhaged subscribers last quarter, losing 970,000 of them to the two-headed beast of rising inflation and increasing competition. But as tricky as this environment is, Disney proved that it’s still very possible to win customers over: its flagship streaming service, Disney+, added 14.4 million new subscribers last quarter. That’s far more than the near-10 million analysts were expecting, and brings its total to 152 million. Add in the firm’s Hulu and ESPN+ subscribers, and Disney now boasts 221 million members across its streaming platforms – putting it ahead of Netflix for the first time (tweet this). It rounded things out with a theme park segment on magical form, and overall revenue came in 26% higher last quarter than the same time last year.

Why should I care?

Zooming in: Profitability > growth.
There is one caveat, mind you: almost two-thirds of Disney+’s 14.4 million new subscribers were in India, where the average revenue per customer is a fraction of what it is elsewhere. That means its subscriber growth isn’t pulling as much weight as it should be, and might be why Disney is now prioritizing earning more from its existing users. There’s plenty of room for improvement on that front: its streaming business posted a loss of $1 billion last quarter – three times more than the same time last year.

The bigger picture: We’ll be right back after these messages.
Disney is taking a two-pronged approach to boosting its profitability: adding commercials and hiking prices. Starting in December, Disney+ subscribers will have to watch ads to keep paying $8 a month, or pay $3 more for an uninterrupted experience. This Sophie’s Choice is bound to put some viewers off, so it’s no coincidence that the company slashed its 2024 subscriber forecast by 15 million.

Originally posted as part of the Finimize daily email.

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