Disney + is no longer able to grow fast enough to convince investors. The streaming platform has passed 103 million subscribers, but the market is worried about a slowdown in the growth of this now essential engine of the Disney empire.
Analysts were expecting no less than 109 million subscribers for the service launched in November 2019, which was not unworthy until the quarterly results released Thursday. The sanction of the markets was immediate: Disney lost 4% on the stock market during electronic exchanges after the close.
Hit hard by the Covid crisis, which forced it to close its amusement parks and deprived of cinema tickets, Disney managed to stay afloat last year thanks to its investments in Disney + and other streaming platforms. The latter took advantage of the pandemic to recruit subscribers, but the pace seems to be slowing down.
“Lots of attention” for the series “Loki”
Disney seeks to qualify this slowdown. “Keep in mind that we have conquered 30 million households during the first six months of the fiscal year,” Bob Chapek, the group’s boss, recalled on a conference call.
He has promised substantial investments in successful franchises, including Star Wars. The release in June of the series “Loki”, from Marvel Studios, must generate “a lot of attention”, he bet. “Attention is the precursor of net additions to subscriptions,” he insisted.
The platform should also continue to conquer markets: it will soon be available in Malaysia and Thailand, in particular. Disney still expects a total number of subscribers (all platforms combined, ie Disney +, Hulu and ESPN +) of between 230 and 260 million by the end of 2024. By way of comparison, Netflix, the industry leader, surpassed 200 million subscribers in January.
Experts nevertheless predict an increase in acquisition costs (marketing, etc.) for the Californian group. “Disney + has done well to attract fans and families, but now they will have to seduce spectators” not acquired in the universe of the mark, noted Joe McCormack of Third Bridge, quoted by AFP.
Heavy impact of Covid
The entertainment giant is still largely suffering from the Covid crisis, between closed amusement parks, interrupted cruises, deserted cinemas and theaters and cancellation of sporting events. She said in a statement Thursday that the restrictions and security measures related to the health crisis should cost her $ 1 billion for the 2021 fiscal year.
In the second quarter of its staggered fiscal year (January-March), its turnover fell by 13% over one year. At $ 15.6 billion, it is below market expectations. All activities saw their revenues decline, except streaming platforms, which brought in $ 4 billion, + 59% year on year. This division also reduced its net loss from 805 million to 290 million.
In addition to its flagship service Disney +, the company is reaping the rewards of its investments in another streaming platform, Hulu, which is based on a hybrid model, subscription or free with ads. It is very successful in the United States. “The growth in advertising revenue (on this service) has been particularly strong,” notes Eric Haggstrom of the eMarketer firm.
Reopening of amusement parks
Disney is also gaining strength in the transmission of sporting events. The Californian giant announced Thursday that its subsidiary ESPN has acquired the broadcasting rights to La Liga, Spain’s football championship, for $ 1.4 billion, which covers the next eight seasons. “This agreement strengthens ESPN + ‘s predominant place for football fans in the United States,” commented Bob Chapek.
The “Parks, experiences and derivative products” activity continues to suffer from the Covid. It has achieved “only” 3.2 billion in turnover, a fall of 44% over one year. The entertainment empire nevertheless feels that it is on the right track thanks to vaccination campaigns and gradual reopening. Its two Californian amusement parks have been welcoming visitors again since April 30.