Disney has bet the farm on Disney+, and so far it has paid off for them and their investors.
But according to tech insider site The Information, internal numbers at Disney are painting a bleaker picture of days to come. It’s believed that Disney has reached a ceiling when it comes to acquiring new subscribers, and now it’s mostly about managing “churn.”
And over a third of Disney+ subscribers are from India, where they only pay the equivalent of 45 cents per person versus $7.99 here in States.
From The Information…
Signs that growth at Disney+ was slowing were evident when the company reported its second fiscal quarter results in May. Analysts had expected the service would have reached 110 million subscribers by then—roughly where it is now.
The data has some positives for Disney. Churn, the rate of subscribers defecting, is trending down. And that decline is particularly accentuated for those subscribers signing up for Disney+ as part of a discounted bundle Disney offers that includes Hulu and ESPN+, according to the internal data.
The slowdown coincides with a price increase Disney imposed in late March, by $1 a month to $7.99 in the U.S. That’s still well below the prices of rival services such as Netflix, whose most popular tier costs $13.99, and HBO Max, which costs $14.99.
Most of Disney’s new subscribers are linked to Hotstar, and Disney seems keenly interested in appealing to Indian consumers. And again, those customers aren’t worth as much, financially, as Western customers.
According to their Disney insider, the company is reportedly concerned about appealing to groups outside of their family-friendly demographic as they seem to be hitting a wall.
This compared to Netflix, which has content for nearly everyone and every demographic.
Even The Motley Fool is weighing in on the situation, which is a marked turn from how financial sites were praising Black Widow’s box office performance as an indicator that everything is coming up Mickey.
Diehard Walt Disney shareholders will be quick to point out that Disney+ is not yet available all over the world, and besides, the service’s price increase that went into effect in March was likely to have some sort of adverse impact on subscriber growth. And to be fair, there’s something to those arguments.
There are still red flags no Disney investor can afford to ignore, however.
One of them is the fact that streaming rival Netflix is also peaking in terms of subscriber growth, here and abroad. Last quarter’s total quarter-on-quarter addition of just under four million paying customers was not only below expectations for six million but the second-worst showing since the company’s subscriber growth surged at the start of the pandemic in early 2020.
While Disney+ was a godsend to the company during 2020, Disney will have to massively up its game to stay ahead of the curve in the increasingly crowded streaming platform market.
[Source: The Information]
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