Disney Plus powered to a strong year-end finish, with the media giant’s flagship streaming business blowing past expectations to hit almost 130 million users.
At the end of 2021, Disney Plus had 129.8 million paying customers worldwide, gaining 11.8 million for the quarter ended Jan. 1, 2022. Analysts on average had forecast net adds of 7.3 million for the period, per FactSet.
The strong year-end streaming results came after the Mouse House missed subscriber targets the prior quarter. For the full year 2021, Disney Plus’ subscriber base grew 37%, up from 94.9 million a year prior.
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Overall, Disney reported revenue of $21.82 billion and adjusted earnings per share of $1.06 cents for the period, the company’s first quarter of fiscal 2022. That handily beat analyst consensus estimates of $18.36 billion in revenue and EPS of 61 cents and sent the company’s shares soaring. Disney stock was up nearly 10% in after-hours trading on the beat.
For the first time, Disney broke out Disney Plus numbers by region: In the U.S. and Canada, the streamer had 42.9 million customers (up 18%); internationally excluding Disney Plus Hotstar, it had 41.1 million (up 40%); and Disney Plus Hotstar, which is the streaming brand in India and certain other Southeast Asian countries, had 45.9 million (up 57%). The streaming service benefitted from some buzzy programming, including The Beatles docuseries “Get Back” and “Hawkeye,” a spinoff from the company’s ever expanding Marvel universe.
The company also disclosed that average revenue per subscriber the most recent quarter was $6.68 for the U.S./Canada (+15% year over year) and $5.96 internationally (+26%). Disney Plus Hotstar’s ARPU was $1.03/month, up 5%.
ESPN Plus ended 2021 with 21.3 million customers (up 4.2 million the year-end quarter), and Hulu had 45.3 million total (up 1.5 million sequentially), including 4.3 million with the live TV package (up 300,000 versus the previous quarter).
Disney Plus gained 2 million U.S. subs in the quarter because of the decision to bundle Disney Plus and ESPN Plus with Hulu With Live TV (for an extra $5/month), CFO Christine McCarthy noted on the company’s earnings call.
Disney Plus remains firmly in investment mode as it fights for share in the global streaming market. The media conglomerate has told Wall Street it plans to spend $33 billion on content for the 2022 fiscal year, up $8 billion year over year, with much of the increase earmarked for Disney Plus as well as Hulu and ESPN Plus. Disney expects Disney Plus to reach 230 million-260 million total paid subscribers by September 2024, and that the service will be profitable in fiscal 2024.
Disney has yet to name a new head for Disney Plus after it reorganized the global direct-to-consumer streaming organization last month. With the reorg, Michael Paull was elevated to president of Disney Streaming; Joe Earley, former head of Disney Plus marketing and operations, was tapped as president of Hulu (reporting to Paull). The company also formed a new hub for international content creation led by Rebecca Campbell, who previously headed DTC operations.
Disney’s media and entertainment distribution segment, which includes not only its streaming services, but also its film and TV operations, saw revenues increase 15% to $14.6 billion, up from $12.7 billion in the prior-year quarter. Operating income surged from $1.3 billion to $3.2 billion. The three-month period saw the release of streaming hits like “Encanto,” as well as several box office disappointments such as “West Side Story” and “The Last Duel.” “Encanto” also failed to generate impressive ticket sales during its theatrical run but became a breakout on Disney Plus, which could mean that the animated film has more installments and spinoffs in its future.
“We do not subscribe to the belief that theatrical is the only way to build a Disney franchise,” Disney CEO Bob Chapek told investors on a call after earnings were announced.
Many of Disney Plus’s streaming series, such as “WandaVision” and “The Mandalorian,” have emerged out of film series and have been geared at viewers with kids. But the Disney chief made it clear that the service still has “headroom” for increasing its streaming subscriber base, and will add more general entertainment, such as “Black-ish” and “Wonder Years” to attract a broader audience. It will also continue to back blockbuster shows, including “Obi-Wan Kenobi,” which Disney announced would debut on May 25.
“We are bullish on our content, not only in terms of quantity, but also in terms of quality,” Chapek said.
But it wasn’t just streaming that drove the surge. Disney’s parks and experiences segment got a boost after being decimated by COVID-19 restrictions for much of 2020 and 2021. Overall revenues more than doubled to $7.2 billion, up from $3.6 billion in the prior-year period. Operating income swung to $2.4 billion compared to a loss of $119 million in the year-ago period. But there are still areas where the pandemic continues to be felt. Disney said its cruise ships were operating at reduced capacity, while operating costs and marketing at its parks were higher than in prior quarters.
The three-month period was a time of transition for Disney, with Bob Iger, the business leader who had orchestrated the company’s purchase of Lucasfilm, Marvel and Pixar, retiring from the company after a decades-long stint. His successor, Chapek, alluded to the end of one era and the beginning of a new one in his statement accompanying the report.
“This marks the final year of The Walt Disney Company’s first century, and performance like this coupled with our unmatched collection of assets and platforms, creative capabilities and unique place in the culture give me great confidence we will continue to define entertainment for the next 100 years,” Chapek said.
(Pictured above: Disney’s Oscar-nominated “Encanto,” which premiered on Disney Plus on Dec. 24)