The entertainment giant Disney had nearly 130 million subscribers to its Disney+ online video service in early January, a figure well above expectations. Disney + gained 11.7 million subscribers in one quarter, to reach 129.8 million, according to a press release from the group on Wednesday, significantly more than the 124.6 anticipated by the consensus of analysts established by FactSet.
The group also managed to increase the average revenue per Disney+ subscriber by 9%. Revenue from online video services, which include Disney+, Hulu and ESPN+, grew 34% year-on-year. However, the activity remains in the red and saw its operating losses widen to $600 million in the quarter.
Disney is playing big in the online video segment, which needs to offer a new engine of growth as traditional television runs out of steam. Although they remain significantly higher than those of streaming, revenues from conventional television have stagnated over one year.
Still on the content side, Disney benefited from the success of several films, first and foremost Spider-Man: No Way Home, co-produced with Sony, which has grossed $1.77 billion at the box office since its release in mid-December. During the first quarter of its staggered fiscal year (October to September), the Burbank (California) company also benefited from the resumption of its amusement parks, many of which had been closed for all or part of the same period of 2020. .
The branch’s turnover thus doubled, with the considerable increase in the number of admissions but also the increase in the average amount spent per visitor. All businesses combined, revenue rose 34% year-on-year to $21.8 billion in the first quarter of their fiscal year. Profit was $1.1 billion.
Earnings per share, scrutinized by analysts, came in at $1.06, much better than the expected 73 cents. The market seemed to welcome this release. In electronic trading after the close of Wall Street, Disney shares gained 7.29%.
Increasingly tough competition
Overall entertainment empire results “says a lot about Disney’s strong brands and its ability to rise above the competition in an increasingly crowded digital media marketplace”commented Paul Verna, analyst for the firm Insider Intelligence.
The Disney figure contrasts with that of Netflix. The veteran has almost double the number of subscribers, but only gained 8.2 million paid accounts over the period, to end the year at 221 million.
“Disney left to give Netflix a hard time”warns Tuna Amobi, an analyst at CFRA. “They’re on a faster trajectory and that’s no surprise. […] Disney has a huge pipeline of content, recognized names and global franchises”.
Launched in November 2019, just over two years ago, Disney + is all about growth and does not aim for balance until 2024. Disney plans to devote an envelope of $ 22 billion to its content (excluding sport) in 2022, with series galore and more than one new film a week in the pipeline. And even if the service is still gaining a lot of subscribers in the United States, unlike Netflix which has already almost saturated the market, the battle is now being played out internationally, where the number of paid accounts has increased by 40% in one year.
Like Amazon Prime Video, Disney is following the Netflix model and has started work on no less than 340 original programs produced outside the United States, which should be available within the next year and a half to two years, a said CEO Bob Chapek on Wednesday.
“We have just created a new entity to guide the development of this content, to maximize the chances of having global success”, explained the leader. Already the holder of an unparalleled catalog, with Marvel, Pixar or Star Wars, Disney dreams of a foreign hit at the Squid Game.
The Burbank (California) giant is currently present in only around 60 countries, compared to more than 190 for Netflix, but aims to add 100 more by 2023. “This is where you’ll see the upgraded subscription numbers” compared to Netflix, anticipates Tuna Amobi.
India, a symbol of this fierce struggle to conquer new territories, where Netflix, Disney and Amazon are jostling to try to capture a share of this market, had only 70 to 80 million paying subscribers last year. to an online video service in a country of 1.4 billion people.
Netflix did not hesitate to lower its prices there, at the end of December, to remain competitive, against the current of its current pricing policy, while Disney relies on its subsidiary Hotstar, leader of the Indian market but whose revenues per subscriber are more than 80% lower than the other countries where Disney+ operates.
Even though they now have 27 million subscribers outside the United States (73.8 in total), HBO and its HBO Max service do not seem to have the same firepower. Their planned marriage with Discovery, its Discovery+ platform and its 20 million accounts, which will be finalized in the spring, should transform the group.
As for Paramount+ (47 million subscribers) or Peacock (24.5 million users, all in the United States), or even Apple TV+ (20 million), they are, for the time being, only second knives. . “If you don’t have the resources to finance investments in content, it will be very difficult to compete with Disney+, Netflix and Amazon”believes Tuna Amobi.
However, “the idea is more for each platform to take a fair share of a growing pie”, explains the analyst. The firm Digital TV Research estimates that online video services will have 1.7 billion subscribers worldwide in 2026, including 910 million for the five main American platforms.
“There is more competition than there has ever been”Admitted Netflix co-CEO Reed Hastings when the group reported results in mid-January. “But we’ve had Hulu and Amazon (as competitors) for 14 years.” For him, as traditional television disappears, “within 10 to 20 years”, “streaming will become all entertainment”.