Disney+ Hits 95M Subs In 14 Months, Though ARPU Down 28%

Disney+’s phenomenal growth continued through the end of 2020, reaching 94.9 million paid subscribers in the less than 14 months since its launch, according to Walt Disney Company’s fiscal first quarter earnings report on Thursday.

The latest total as of the quarter ended Jan. 2 represented a 258% increase over the previous fiscal Q1, when the streaming service had 26.5 million subscribers.

Hulu’s Live TV + SVOD service lost 100,000 subscribers, but its 4 million total was still up 25% year-over year. Hulu SVOD-only gained 30% YoY, to reach 35.4 million. Hulu’s 39.4 million overall total was also up 30% YoY.

ESPN+ subscribers jumped 83% YoY, to 12.1 million.

Combined, the three services have 146.4 million global subscribers. While that’s still 57 million shy of Netflix’s 203.7 million as of year-end 2020, it’s the closest any rival has come thus far to the world’s leading streaming service.

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However, average revenue per subscriber (ARPU) for Disney+ was down 28% in the quarter (to $4.03).

That was attributed to the launch of Disney+ within the South Asian streaming giant Hotstar, now controlled by Disney. One of the popular deals for the Disney+ Hotstar bundle includes Disney+ at under $2 per month, and indications are that Hotstar accounts for up to a third of Disney+’s nearly 95 million global subscribers, reports Deadline.

To address the declining ARPU, Disney is increasing Disney+ prices in March, from $6.99 to $7.99 per month and from $69.99 to $79.99 per year. The Disney+, Hulu and ESPN+ bundle will rise by $1, to $13.99 per month.

ESPN+ solo, which had a recent price increase, saw its ARPU rise to $4.48 from $4.44 in fiscal Q1. Hulu Live TV + SVOD’s ARPU rose 26%, to $75.11, and SVOD only rose 3%, to $13.51. 

The pandemic drove revenues for Disney’s Theme Parks, Experiences and Products business down 53%, whereas the Media and Entertainment Distribution unit (which includes the streaming services/D2C, linear networks and content sales/licensing) was down by a relatively moderate 5%. As a result, the overall 22% revenue decline, to $16.2 billion, beat forecasts.

D2C revenues rose 73% to $3.5 billion and linear networks eked out a 2% gain to $7.5 billion, helping to offset a 56% plunge in content sales/licensing to $1.7 billion. (The media/entertainment unit also saw a $238 million decline due to a restructuring-driven elimination of intrasegment revenue.)

D2C operating income rose 58%, reducing the segment’s losses to $466 million, from $1.1 billion a year ago and signaling that the streaming services might be able to achieve breakeven before Disney’s projected date of 2024.

Linear networks' operating income declined 4%, to $1.7 billion, and content sales/licensing operating income dropped 76%, to $188 million, for a total operating income decline of 2% (to $1.45 billion).

Disney’s diluted earnings per share (excluding certain items) of 32 cents were down 79%, from $1.53 in the year-ago period.

Last year, Disney reorganized its management team into two core content and distribution groups.

“We believe the strategic actions we’re taking to transform our company will fuel our growth and enhance shareholder value, as demonstrated by the incredible strides we’ve made in our DTC business, reaching more than 146 million total paid subscriptions across our streaming services [Disney+, Hulu and ESPN+] at the end of the quarter,” CEO Bob Chapek stated in the earnings release.

“We’re confident that, with our robust pipeline of exceptional, high-quality content and the upcoming launch of our new Star- branded international general entertainment offering, we are well-positioned to achieve even greater success going forward.”

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