Subscription growth at Walt Disney’s flagship video streaming service, Disney+, slowed in its fourth quarter, disappointing Wall Street and raising concerns that it has stalled after a blistering start during the depths of the Covid-19 pandemic.
Total Disney+ subscriptions rose to 118m in the quarter, up 60 per cent from a year earlier — but below targets of 119.6m. It added 2.1m subscribers in the three months to October 2.
Bob Chapek, chief executive, has said that achieving strong growth at Disney+ is the company’s top priority as it seeks to compete with Netflix.
Mike Proulx, research director at Forrester Research, said Disney+ faced increased competition from rival services in the quarter.
“There are more choices in streaming content, and consumers only have so much budget to spend,” he said. “The other factor is Covid-related production issues. There was a slowdown in the amount of original content they could put out.”
The company said it was increasing its long-term spending on new content for the service, which Chapek said should help boost subscriber growth in the second half of 2022.
Disney also expects a stronger pipeline of new content now that the worst of the Covid-19-related film and television production delays are over. The company plans to showcase new titles for Disney+ on Friday.
Chapek said he was confident that Disney would reach its target of securing as many as 260m global subscribers for its video streaming service by 2024.
Most of Disney’s businesses were hurt by Covid-19, which forced the closure of its theme parks and cruise lines, shut down movie theatres and halted work on films and TV.
With most of those operations at least partially reopened, the company returned to profit in its fourth quarter. A strong theatrical showing by the superhero film Shang-Chi and the Legend of the Ten Rings helped in the fourth quarter, but the most dramatic swing was at theme parks, which had operating income of $640m, compared to a loss of $945m a year earlier. However, those results also fell below Wall Street’s targets.
Company officials told investors that there will be a “prolonged pace of recovery” in theatrical releases, which will probably affect box office results.
Overall net income was $159m in the fourth quarter, compared to a $710m loss a year ago.
The disappointing results sent Disney shares down as much as 4.3 per cent to $166.90 in after-hours trading. The stock is down 1.82 per cent for the year.