Disney reveals unexpected drop in Disney+ subscriber count
The bet was risky. Disney is showing an unexpected drop in the number of subscribers…
The bet was risky. Disney is showing an unexpected drop in the number of subscribers to its Disney+ streaming service. Over the first three months of the year, Disney lost four million net subscribers, down to 157.8 million at the end of the period, while analysts saw this indicator progress, beyond 163 million. In electronic trading after the close of Wall Street, the group’s share lost 3.19%.
The contraction of the Disney + subscriber portfolio is mainly due to an 8% drop in India, where the version of the service, called Hotstar, weighs almost a third of the world total. But the entertainment giant also saw a slight decline (-1%) in North America.
The Californian entertainment giant had raised its prices, a risky strategy in an uncertain economic environment. Since December 8, a Disney+ subscription costs 11 dollars per month instead of 8. Subscribers can continue to pay 8 dollars provided they accept adver. Offers combining subscriptions to Hulu, Disney + and ESPN + are also a little more expensive (75 dollars instead of 70 in the United States).
But the move helped Disney increase average revenue per subscription by 13%. The streaming activity, however, remains loss-making, but it continued to reduce its losses over the quarter.
This strategy also contributed to increasing the group’s sales in the first quarter. As a result, its turnover is better than expected: the group from Burbank (California) generated 21.8 billion dollars in revenue, up 13% over one year.
The increase in sales exceeds that of costs
As in the previous quarter, the group’s results were driven by theme parks, whose turnover jumped 17% over one year, thanks to better attendance but also to price increases. The increase in the parks alone even reached 23%, but the branch’s revenues were affected by the poor performance of sales of derivative products, whose turnover fell by 23%.
Overall, Disney managed to contain the increase in costs (+10.7%) at a slower pace than its revenues (+13%). This favorable difference is explained in particular by the cost-saving measures decided by the general manager Bob Iger, emblematic boss of the firm who returned to control last November. The company has notably decided to cut 7,000 jobs.
Net profit was nearly tripled to $1.488 billion. Brought back by share and excluding exceptional items, data closely followed by the markets, the profit reached 93 cents, in line with analysts’ expectations.