Disney+ sees smallest subscriber growth since launch in battle with Netflix

Walt Disney Co (DIS.N) on Wednesday missed Wall Street earnings projections as it reported the smallest quarterly gain in Disney+ subscribers since the company dove into the streaming video market two years ago to compete with Netflix Inc (NFLX.O).

Profits from Disney’s theme park division fell well short of Wall Street projections, despite the quarter being the first time all parks were open since various pandemic closures.

Disney+ picked up 2.1 million customers during the quarter, less than half the subscribers Netflix added in roughly the same period. Analysts had projected Disney+ would add 10.2 million, according to Factset estimates.

Disney shares fell 4.3 per cent in after-hours trading.

Chief Executive Bob Chapek stuck by the company’s previous forecast of 230 million to 260 million Disney+ subscribers by the end of fiscal 2024.

Disney has staked the company’s future on building streaming services to compete in a crowded online video market dominated by Netflix.

“The company seems to be hitting a roadblock when it comes to subscriber growth for its streaming service,” said Haris Anwar, an analyst at Investing.com. “Investors feel the company could miss its target of reaching 260 million subscribers by 2024, creating doubts that its service can create a serious challenge for the market leader, Netflix.”

As of early October, paying subscribers to Disney+ reached 118.1 million. Including Hulu and ESPN+, the company’s streaming customers totaled 179 million.

Disney’s streaming media division, known as direct to consumer, continued to lose money as the company paid for new programming and other costs. The unit reported an operating loss of $630 million in the quarter.

Overall, the media company posted diluted earnings per share of 37 cents, below analyst projections of 51 cents. Theme park division income reached $640 million, short of Wall Street projections of $942 million.

This week, Disney is offering the first month of Disney+ for $2, down from the usual $8, and other promotions.

On Friday, Disney will debut adventure movie “Jungle Cruise,” Marvel film “Shang-Chi and the Legend of the Ten Rings,” a new “Home Alone” movie and a batch of other programming on streaming.

Disney also missed analysts’ estimates for quarterly revenue.

Revenue rose to $18.53 billion in the fourth quarter from $14.71 billion a year earlier. Analysts had expected $18.79 billion, according to IBES data from Refinitiv.

Net income attributable to the company was $159 million, or 9 cents per share, compared with a loss of $710 million, or 39 cents per share, a year earlier.