Disney+ subscriptions soar to 28.6 million, topping estimates
Walt Disney Co.’s crusade to become a streaming giant is off to a swift start.
Subscribers to the new Disney+ online service soared to 26.5 million last quarter, a sign the 96-year-old company can challenge Netflix in an increasingly crowded market. The number was well above the 20.8 million subscribers projected by the Bloomberg Consensus, and has since jumped to 28.6 million, Chief Executive Officer Bob Iger said Tuesday.
The surge for Disney+ marks an early success for the company. With three streaming services—Disney+, ESPN+ and Hulu—Iger has firmly steered Disney into on-demand viewing from conventional TV. But it’s coming at a cost: Disney said fiscal first-quarter profit fell—the result of outlays for new online movies and TV shows.
Disney has seeded the new service with nearly all of its most-popular movies and TV shows, including “The Mandalorian,” a “Star Wars” spinoff featuring the cuddly character known as Baby Yoda. Hulu’s 30.4 million customers led the company’s online effort last quarter, while ESPN+, the new sports service, has attracted 6.6 million subscribers. That’s up from 1.4 million a year ago.
The services continue to benefit from a $13-a-month offer from Disney that includes all three products. Disney+ also had a promotional tie-in with Verizon Communications Inc. Iger said on a call with investors that Hulu has since climbed to 30.7 million, while ESPN+ has reached 7.6 million.
Disney shares rose as much as 3.6 percent to $149.94 in extended trading before trimming their gain. The stock advanced 2.4 percent to $144.73 at the close in New York and is up almost 30 percent in the past 12 months.
Burbank, California-based Disney said Tuesday that fiscal first-quarter earnings fell to $1.53 a share, a number that still beat analysts’ estimates of $1.46. Sales grew 36 percent to $20.9 billion in the period ended Dec. 28, slightly exceeding estimates.
The drop in profit reflects costs from the company’s $71 billion purchase of Fox’s entertainment assets last year, as well as the ongoing investment in movies and TV shows for streaming.
Disney’s direct-to-consumer division, where streaming results are reported, posted a wider loss of $693 million in the quarter, although that was less than the Bloomberg Consensus forecast for a loss of $823 million.
The movie division reported a stellar quarter, with profit more than tripling to $948 million, thanks to strong results from “Frozen II” and “Star Wars: The Rise of the Skywalker,” two of the seven films the company produced last year that topped $1 billion in sales.
Profit at the theme parks division grew 8.6 percent in the quarter, but Disney is now facing a new threat to its tourist business from the coronavirus. The company has closed its $5.5 billion Shanghai resort and said its Hong Kong park will also close due to the outbreak.
Disney’s TV unit saw its earnings rise 23 percent, with the addition of the Fox cable networks and TV studio. That countered higher costs for sports rights and fewer subscribers at ESPN.