Disney Hits 179 Million Total Streaming Subs as It Plans Bigger International Push

After the global success of Netflix series like Squid Game and Lupin, Disney+ is laying the groundwork for its own international hit. The streaming service, which saw a slight slowdown in subscription additions in Disney’s fourth quarter, is pouring additional resources into local and regional content around the world as it looks to grow its global subscriber base even further, Disney CEO Bob Chapek told investors this afternoon. That includes more than 340 local original titles in various stages of development around the world. “We recognize that the single most effective way to grow our streaming platforms worldwide is with great content,” Chapek said. “We are singularly focused on making new high-quality entertainment, including local and regional content that we believe will resonate with audiences.” With that investment in local content, though, comes additional cost, and Disney is expecting to spend even more on programming in the coming years. Disney previously told investors that it expected to spend between $8 billion and $9 billion on programming costs in fiscal year 2024; now, the company expects that figure will climb even higher, although Chapek did not provide an updated figure. ESPN+ Bets on Exclusivity to Drive Growth The intensified international focus, which Chapek said as the company reported its fourth-quarter earnings today, comes as Disney continues to expand into international markets. On Friday, Disney+ will debut in South Korea and Taiwan, and in 2022, the company will debut in 50 additional countries, including in Central and Eastern Europe, the Middle East, and South Africa. By fiscal year 2023, the company aims to be operating its family-friendly streaming service in more than 160 countries, doubling its current footprint, Chapek said. Slowdown in subscriber growth The plans come as Disney’s direct-to-consumer streaming division reported a slight slowdown in subscriber growth after an astonishing pace of growth since debuting almost exactly two years ago. In the fourth quarter, Disney+ counted more than 118 million subscribers around the world, up slightly from the 116 million it had reported one quarter ago. Hulu, which only operates in the U.S., counted 43.8 million subscribers in the quarter, Disney said, about one million more than the 42.8 million subscribers it reported a quarter ago. (Most of those Hulu subscribers continue to come in only for Hulu’s on-demand service; about 4 million of the service’s customers pay extra to watch live TV, down slightly from a year ago.) ESPN+, Disney’s smallest streaming service, counted the biggest subscriber growth in the quarter. The service, available as a standalone product or as part of the Disney Bundle, counted 17.1 million subscribers in the quarter, up by 2.2 million from a year ago; year-over-year, ESPN+ grew its subscriber base by 66%. Overall, the company counted 179 million total subscriptions across its entire direct-to-consumer portfolio. Disney’s projected 2024 subscriber count—between 230 million and 260 million—remains unchanged, Chapek said. The CEO blamed the subscriber growth slowdown on the Covid-19-related production shutdown that hamstrung production last year, along with the subsequent production bottleneck that has thwarted the release plans of some series and films. While library titles are key for engagement and churn reduction, original titles on Disney+ are essential to draw new customers, Chapek told investors, echoing other entertainment executives who have indicated the same dynamic on their rival services. “The hunger for content for the service is extraordinary, and when you have that happen at the same time you have a pandemic and you have to shut down production, that’s not a good combination,” Chapek said. “We identified the need for the content way back, exactly a year ago, and have prepared a very strong cadence of content that will now hit the pipeline in the second half of the year.” Building up the content cadence The content machine will really kick into full gear beginning next summer, at which point many of the titles and projects first unveiled at a Disney investor presentation a year ago will finally begin arriving on the service. The fourth quarter of 2022 will mark the first time that new titles from Disney's biggest brands—Marvel, Pixar, Star Wars and National Geographic—will arrive during the same quarter, Disney chief financial officer Christine McCarthy said. That fast clip of new releases is what investors should expect to see going forward, Chapek said. Along with the continued addition of new international markets into the Disney+ footprint, the company expects the new programming will help improve subscriber growth substantially. McCarthy assured investors that in late 2022, “subscriber net adds will be meaningfully higher than the first half of the year.” Before that, Disney is ramping up for a big promotional effort at the end of the week with Disney+ Day, a two-year anniversary of the service’s Nov 12 debut in 2019, which comes with it new programming that may entice new subscribers. The event, which kicked off Monday with a steeply discounted one-month deal for new and returning Disney+ customers, will reach its apex on Friday with weekend-long discounts on Disney merchandise and the streaming release of several new titles, including the films Shang-Chi and the Legend of the Ten Rings and Jungle Cruise, as well as the second season of the National Geographic original series The World According to Jeff Goldblum. Disney is also banking on two of its buzziest titles that will arrive at the tail-end of the year, beginning with the Marvel original series Hawkeye starring Jeremy Renner and Hailee Steinfeld, which will premiere on Nov 24, and the Star Wars original series The Book of Boba Fett, which will premiere on Dec 29. While those titles may serve to boost additional interest in the service at the end of 2021, Chapek suggested that investors temper their expectations around quarterly subscriber gains, especially in the coming quarters. “We remain focused on managing our DTC business for the long term, not quarter by quarter,” Chapek said.