A year ago today, the Disney+ streaming service made its big debut to the public. As of its first anniversary, the crown jewel of Disney’s streaming ambitions has already cleared 73.7 million subscribers, as of Oct. 3, the company said today—signaling the speed at which its efforts to pivot to the direct-to-consumer business are paying off.
That early success serves as a contrast to the legacy portions of the business, which continue to sag under Covid-19’s unrelenting pressure.
“The real bright spot amidst the pandemic has been our direct-to-consumer business,” CEO Bob Chapek told investors Thursday during the company’s quarterly and annual earnings results. “One year ago today, we launched Disney+ and it has quickly exceeded our highest expectations.”
It’s not just Disney+, though: Disney is notching noticeable wins across its entire streaming portfolio. Hulu’s total subscribers hit 36.6 million subscribers in Oct., a 28% increase from a year prior and a modest 400,000 subscriber uptick from last quarter. Those Hulu subscribers are primarily coming in through its on-demand video service, which had 32.5 million subscribers. Hulu’s Live TV offering, the most expensive product in Disney’s streaming portfolio, notched 4.1 million subscribers, a 41% increase compared to the previous year.
Meanwhile, ESPN+ had 10.3 million subscribers, growing 1.8 million from the prior quarter and a more than 100% increase from a year ago.
Part of that streaming growth is coming from continued international roll-out of Disney+. Those gains are expected to continue in the fourth quarter as Disney+ expands in Argentina, Brazil, Chile and other Latin American countries. It’s also bolstered by the Disney+ bundle offering that the company has promoted considerably. That package lowers average revenue per user slightly but has helped buoy growth.
While the company doesn’t break out streaming alone, its direct-to-consumer and international segment, which includes the streamers, saw revenues increase 41% in the quarter to nearly $4.9 billion. Operating losses in the segment narrowed by nearly a quarter to $580 million.
Chapek said the company would continue to pour money into original and other programming to bolster its streamers’ libraries and keep customers coming back. Expenses will also mount as Disney readies an international service. That effort will premiere in 2021 under the company’s Star brand. The company has set a Dec. 10 investor day where more details about that streamer will be detailed.
“You’re going to see we are going to put a lot of sails into the Disney+ business and heavily invest in it,” Chapek said. “We are going to continue to ramp up our investment in DTC, and we will be heavily tilting the scale from linear networks over to our DTC business. We see that, as we said in our opening comments, as our primary catalyst for growth as a company.”
That scale-tilting has been made evident in the ongoing restructuring within Disney’s ranks, which began in October with a restructure of the company’s media and entertainment businesses and continued this week with a shake-up within its general entertainment division.
Chapek said that given the other disruptions in the world, “this is the perfect time for us to do such a reorganization,” and that he had “100% buy-in” from across the company about the changes.
Some changes and experiments have proven out to be more successful than others. The company made a bold decision to make the live-action film Mulan available to rent on Disney+ as a premium title this fall instead of a traditional theatrical release. While Chapek said the company was “very pleased” with Mulan’s results, the company did not disclose figures. One factor that Chapek acknowledged may have dampened the response: the film was met with controversy around the world soon after its release because it was filmed in Xinjiang, a Chinese province where Uighur Muslims have been held in concentration camps.