Disney seems to have acquired a bit of Netflix-itis.
Just as Netflix added fewer than 4 million global subscribers in the first quarter, disappointing investors, Disney announced that it now has 103.6 million Disney + subscribers, far less than the 109 million estimated by analysts. Disney shares fell about 4% in after-hours trading.
On the surface, both Disney and Netflix can explain the disappointing growth by citing the surge in viewers at the beginning of the pandemic. The logic is simple: far more people signed up for Disney + and Netflix in the first six months of the pandemic than the companies had counted. Given the increase, it is natural for growth to recede to more “normal” levels as the pandemic subsides.
Additionally, both Disney and Netflix can safely assume that subscriber growth will accelerate in the second half of the year as production on the show begins again with serious, high-profile content, such as “Loki” and “Luca” for Disney. , that reaches the video stream. later this year.
But there is a significant difference between the two companies where Disney falls short: average revenue per user.
The average Disney + revenue per user, excluding India’s Hotstar, was $ 5.61 per month. Netflix ARPU in the latest quarter in the US and Canada was $ 14.25 per month, up 9% from a year ago.
If you are going to have slow growth, you want your customers to pay as much as possible. Disney’s subscription video-on-demand service Hulu has a higher ARPU, $ 12.08 per month, but its growth was negligible, just 2 cents per month from a year ago. Hulu has 37.8 million subscribers, which rises to 41.6 million if you include those who also buy live TV.
None of this is particularly concerning to Disney CEO Bob Chapek, who noted that “all markets have exceeded expectations” in terms of global subscriber additions. He also noted that Disney is still expanding into new countries, with Malaysia and Thailand in June.
But Disney + has jumped into the big streaming leagues. In 2020, the logical comparison for Disney + was HBO Max, Peacock, and other new streaming media services.
Given Disney’s success, this year’s comparison will be Netflix. Disney has already projected 230 million to 260 million subscribers by 2024. That’s Netflix land. Netflix has around 208 million customers.
Netflix has been able to raise prices gradually over the years without stopping global growth. Disney can do the same, but the stark differences in ARPU between the two companies illustrate the long way to go.
Disclosure: Peacock is the video streaming service of NBCUniversal, the parent company of CNBC.
