Disney’s streaming services – Disney+, Hulu and ESPN+ – have overtaken Netflix in viewership as Mouse House’s five-year push into the digital streaming space finally comes to fruition.
Disney now has 221 million streaming customers across all of its platforms, surpassing the 220.7 million subscribers Netflix announced in July, after Disney+ added 14.4 million customers. during the last quarter ending July 2. Disney’s flagship streaming site also beat analyst consensus polled by FactSet, which predicted it would add 10 million customers this quarter.
And with Disney’s dominance set to increase, analysts expect things to get worse for Netflix as it struggles to find new viewers.
“Disney is gaining market share as Netflix struggles to add more subscribers,” Investing.com analyst Haris Anwar said. Told Reuters. “Disney has even more room to grow in international markets where it is rolling out its service quickly and attracting new customers.”
netflix reported a loss of 1 million viewers in the second quarter of 2022, the second consecutive decline in viewership.
But regardless of subscriber numbers, Netflix and Disney+ are both raising their prices for customers who want to watch their services ad-free.
Disney is increasing its ad-free monthly cost by 38% to $10.99 per month in December while offering a cheaper alternative option with ads for its current subscription price of $7.99 per month. Meanwhile, Netflix plans to introduce an ad-supported tier by the end of the year after avoiding the idea for years. In January, it raised the price in the United States for its basic plan to $9.99 per month, its standard plan to $15.49 per month, and its premium plan to $19.99 per month.
Shares of Disney rose 6.9% in after-hours trading to $120.15 and stabilized at $112.43 as of 7 a.m. ET in premarket.
Disney’s five-year push
As audiences moved away from traditional cable and broadcast TV, in 2017 Disney staked its future on building a streaming service to challenge Netflix’s dominance in the digital content space.
After five years, a pandemic, and billions of dollars spent on acquisitions and producing new online content, Disney appeared to be on track to meet CEO Bob Chapek’s February forecast of between 230 million and 260 million subscribers. by the end of 2024.
However, Disney lowered that forecast on Wednesday’s analyst call to between 215 million and 245 million, after lowering its subscriber expectations on its Indian platform Disney+ Hotstar, where the company is losing streaming rights. for Indian Premier League cricket matches. Disney’s chief financial officer, Christine McCarthy, still noted that she expects the company to add 80 million Hotstar customers by September 2024.
Despite rising viewership, Disney continues to lose money on its streaming business as it spends aggressively on content, marketing and technology infrastructure. While revenue from its streaming division soared 19% to $5.1 billion, its losses weighed on the media and entertainment unit, whose profits fell 32% to around 1.4 billion dollars.
Netflix’s Bad Year
Netflix hasn’t had the best year so far.
Shares of the former leading subscription service have fallen 68% since the start of the year – the biggest drop in the S&P 500 and Nasdaq 100 indexes – as the company faces growing competition, the imminent likelihood of a global recession and the end of the pandemic – fueled streaming boom.
Some bullish investors, who thought a turnaround was near and were holding onto shares of the once-popular tech stock, may be starting to lose confidence. Shares of Netflix fell 0.31% to $244.11 in premarket trading at 7:00 a.m. ET.
And as both streaming providers face rising inflation, cost-conscious streamers may be forced to choose subscription services that are “must-haves”.
“Netflix is still the leader in video streaming, but unless it finds more franchises that resonate widely, it will eventually struggle to stay ahead of competitors who are after its crown,” said analyst Ross Bene. to the market research firm Insider Intelligence, after Netflix. released its results in July.
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