Disney Tops 205 Million Global Streaming Subscribers

Disney is putting Netflix on notice. On Wednesday, Disney held its earnings call for the second fiscal quarter of 2022, revealing a gain of 7.9 million Disney+ subscribers, which brings the platform's total global subscribers to 137.7 million. In addition, the company's global direct-to-consumer offerings—also including Hulu, ESPN+ and Disney+ Hotstar—gained 9.2 million subscribers overall, growing its total from 196.4 million subscribers in the previous quarter to 205 million. With the news, the company is quickly approaching streaming leader Netflix. Though Netflix still has a comfortable lead at 221.6 million global subscribers, the streamer revealed in April that it lost 200,000 overall, its first dip in subscribers globally since October 2011, and expects to shed more of them in the next quarter. Disney first revealed its domestic subscriber numbers for Disney+ during the first fiscal quarter of 2022, showing 42.9 million subscribers in the U.S. and Canada. That total has now reached 44.4 million. The company also plans to roll out Disney+ to 53 new markets across Europe, Africa and West Asia by the end of the third quarter. Hulu, which operates only in the U.S., had more meager gains, going from 45.3 million subscribers in the first fiscal quarter to 45.6 million in the second. However, the service has grown 10% year-over-year thus far. ESPN+ fared better, going from 21.3 million to 22.3 million subscribers. Year-over-year, the service has grown 62%. And Disney CEO Bob Chapek noted ESPN could double down on its streaming offer in the future, saying the company is conscious of its "ability to go more aggressively into the DTC area of ESPN." "We know that at some point, when it's going to be good for our shareholders, we'll be able to fully go into an ESPN DTC offering," Chapek said. "We fully believe that there is a business model there for us. That's going to enable us to regain growth on ESPN+ in a full DTC expression." Ad-supported Disney+ is on the way In addition to the growing demand for sports and Hulu, which Chapek said will be a key contributor to the company's upfront, the CEO touted the upcoming Disney+ advertising tier as an enticing offer for marketers ahead of Disney's upfront presentation on May 17 at New York's Basketball City. "We believe it's good for the consumer because it's going to give us another entry price point, but it's also going to be great for the advertisers," Chapek said of the ad-supported tier. "Our advertisers increasingly are looking for multiple platforms to reach a broader reach, and we think that as a company, we're going to provide that given our portfolio with streaming and our linear networks." The company first announced the Disney+ ad-supported subscription offering in March, saying it would come to the U.S. later this year and expand internationally in 2023. During the earnings call, Disney framed the AVOD tier as a way to open avenues for consumer choice and create a building block to achieve its target of 230-260 million subscribers by the fiscal year 2024. And Chapek is confident the ad tier will debut on time and deliver. "The combination of our ESPN+ streaming tech stack and our experience in Hulu, the software, we think that our current advertising capabilities really substantially prepare us to already bring this tier into operations. So there's nothing that we need to go acquire, or frankly, even in any significant way, develop anything new," Chapek said. Though the company touted the advantages of the ad tier, execs were coy when it came to what percentage of subscribers they anticipate will opt for the offering, and also remained mum on pricing. "I think this is going to give us the ability to reach an even more broad audience as we expand Disney+ across multiple price points. And using some of our other services, we can see the additive nature of an ad-driven service that enables us to keep the price lower. Of course, that's made up for by the additional revenue that we will get per user on the advertising spending," Chapek said. "So we believe that we can move up and cascade up our net price over time given the tremendous value that we started with and the increased price-value relationship of all the new content. We’re pretty bullish about that." Currently, Disney+ costs $7.99 per month or $79.99 annually. The Disney streaming bundle, which combines subscriptions to Disney+, ESPN+ and the ad-supported tier of Hulu, is $13.99 a month. Perhaps as an answer to Disney, Netflix also recently floated the idea of adding its own ad-supported tier, which could arrive by year's end. Content with its content Besides touting its new ad tier, Chapek praised Disney+'s content slate, including the performance of Star Wars' The Book of Boba Fett and Marvel's Moon Knight, though he didn't reveal specific metrics around the series. However, the CEO did announce that Turning Red passed Encanto to earn the honor of fastest Disney+ title to reach 200 million hours viewed. Disney+ continues to ramp up content for the second half of the year, with Obi-Wan Kenobi premiering May 27, Ms. Marvel coming in June and the Star Wars series Andor coming this summer. However, Disney+ hasn’t set specific release dates for other major tentpoles, including the upcoming Marvel series She-Hulk and Hocus Pocus 2. The CEO noted that almost half of Disney+ subscribers are adults without kids, so the company will continue to step up its general entertainment efforts. "We are selectively enhancing Disney+ with general entertainment titles designed to drive sign-ups among specific audiences and deepen engagement among those cohorts," Chapek said.

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Disney Tops 205 Million Global Streaming Subscribers, Sets Sights on Netflix

The company shares more details about Disney+'s upcoming ad-supported tier

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