As it surpasses Netflix in the hunt for paying subscribers, Disney will launch a new ad-supported streaming service in the US in December.
At the beginning of July, the company had 221.1 million members among its three streaming channels. That put it just ahead of Netflix, which has been losing customers.
Disney cautioned that the loss of cricket streaming rights in India would slow subscriber growth compared to earlier projections.
The company, which also owns the sports-focused ESPN+ and adult television streaming service Hulu, claimed that demand for its Disney+ offering was still high.
Pandemic lockdowns increased streaming services like Disney, but relaxing Covid restrictions doesn’t appear to prevent luring in new subscribers. More than experts had anticipated, the firm added 14.4 million Disney+ customers in the first quarter, many of whom were located outside of the US.
It will introduce a brand-new ad-supported service later this year, which will continue to be priced at the $7.99 monthly subscription level. The cost of the ad-free subscription will increase to $10.99 per month. The company intends to introduce its ad-supported service outside of the US the following year.
Executives declared that they do not anticipate long-term customer repulsion as a result of the price increase. According to the business, there is also a lot of interest from businesses looking to advertise on the new service.
Gaining more Disney subscribers has a price.
Disney’s gains in subscribers have come at a high price; its streaming division lost $1.1 billion in the quarter.
Executives stated that they anticipate losses to peak this year. However, in the interim, the company has a sizable financial cushion thanks to a significant uptick in visitors to its amusement parks since the worst of the pandemic.
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The period from April to June saw an increase in overall revenues of 26%, resulting in profits of $1.5 billion. Following the company’s earnings release, shares increased by more than 6% in after-hours trading.
It was a “pivotal moment in the streaming wars,” according to PP Foresight analyst Paolo Pescatore, who said that Disney had more opportunity for expansion than Netflix’s main competition.
In the most recent quarter, Netflix lost about one million accounts, bringing its total number of subscribers to 220.67 million.
Disney’s third quarter revenue jump
(DIS) released strong fiscal third-quarter results on Wednesday after the bell. FactSet reports that revenue climbed 26% year over year to $21.504 billion, exceeding predictions of $20.994 billion. Another pleasant surprise was the increase in Disney’s direct-to-consumer subscribers. Adjusted earnings per share of $1.09 beat expectations of $0.97.
While the stock is still down 28 percent since the beginning of the year, Disney’s financial results for the quarter also far exceeded analyst projections, and the company’s shares increased as high as 6.6 percent in extended trading.
The company outperformed Wall Street projections on both the top and bottom lines thanks to increased streaming revenue and a spike in theme park attendance following pandemic-era closures. To $21.5 billion, overall sales increased 26% from the prior year. The average estimate of analysts surveyed by Refinitiv was $20.96 billion in sales.
As more people visited its theme parks, Disney reported adjusted earnings-per-share of $1.09, up 36% from the previous year. In the segment of parks, experiences, and products, operating income increased by more than a factor of two to $3.6 billion.
Disney’s streaming initiative continues to be a financial failure, with a $1.1 billion loss for the quarter. Because of this, the media and entertainment division’s profit fell by 32% to a little under $1.4 billion.
