Subscriber growth was at the top end of analyst estimates. ESPN + now has 12.1 million subscribers, almost double that of a year ago, and Hulu Up 30% to 39.4 million subscribers for its on-demand service and the Hulu + Live TV bundle. With 4 million subscribers to the live bundle, Hulu is now the fifth largest pay-TV operator in the US.
The numbers were highlighted in the company’s first quarter earnings report. Overall results exceeded Wall Street analyst expectations despite a $ 2.6 billion hit to the theme parks business in the quarter from the effects of Covid-19. Streaming has become the pole star for Disney, with investors largely rewarding its growth potential and overlooking the financial wreckage of 2020.
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Direct-to-consumer revenues shot up 73% in the quarter to $ 3.5 billion, with operating losses declining from $ 1.1 billion a year ago to $ 466 million. Management has forecast a break-even for the streaming business by fiscal 2024, but trends suggest it could show up in the black even sooner.
Average revenue per user, a key metric in the streaming industry, has long been a concern internally and with some investors – hence the planned price increases for Disney + next month. In the last quarter of 2019, when Disney + launched, the ARPU was $ 5.56. The inclusion of the service as a no- or low-cost option for existing Hotstar subscribers has boosted global growth, but also limited revenues, at least for the short term.
Disney gained control of Hotstar in the $ 71.3 billion Fox deal and has positioned the South Asian media powerhouse as a key to its growth plans. The Disney Plus The Hotstar bundle includes the Disney + offering for less than $ 2 a month in one popular subscription, and there is evidence that up to a third of the 94.9 million Disney + subscribers come through Hotstar.
Hulu was at the other end of the ARPU spectrum, hitting $ 75.11 for the live TV bundle plus the on-demand service, up 26%. ESPN + remained relatively flat compared to a year ago at $ 4.48.
On investor day in December, Disney announced that it had reached 86.8 million subscribers on Disney +. The last quarter of 2020 included the release of the Pixar movie Soul on Christmas Day, whose numbers indicated third parties, was widely seen. Disney has released virtually no viewer details about content on Disney +, including feature films that have been shifted there due to the coronavirus pandemic. Soul has played in several international territories, has raised more than $ 100 million and is doing particularly well in China.
Internationally, Indian Premiere League cricket matches ended on Disney Plus Hotstar last November, and Verizon’s bundling with Disney + ended after its initial launch in November 2019. While newer Disney promotions have been announced, Verizon said that about a third of customers who signed up for the original Disney bundle has not been renewed. Despite those headwinds and questions about upcoming price hikes, Disney has significantly increased its internal projections for its streaming business on Investor Day. The company now expects Disney + to have 230 million to 260 million subscribers by 2024 (more than three times as many as in 2019), with 300 million to 350 million subscribers for all three major services.
Netflix continues to set the pace for all streamers, with 203.7 million global subscribers at the end of 2020.