Disney subscriber growth blows past estimates, as company beats on top and bottom line

If Disney+’s subscriber growth is any indication, rumors that the global streaming market is close to saturation have been proven false.

On Wednesday, the Walt Disney Company said total Disney+ subscriptions grew to 152.1 million in the fiscal third quarter, more than the 147 million analysts had forecast, according to StreetAccount.

The company’s shares rose by about 5% after the end of the session.

The streaming space has been in a state of turmoil in recent weeks, as Netflix revealed another drop in subscribers and Warner Bros. Discovery has announced a change in content strategy. While Netflix expects subscriber growth to rebound, the uncertainty has analysts and investors wondering what the future holds for the broader industry.

Also on Wednesday, the company unveiled a new pricing structure that includes ad-supported Disney+ as part of an effort to make its streaming business profitable.

In the fiscal third quarter, Disney+, Hulu and ESPN+ lost a combined $1.1 billion, reflecting the higher cost of content on the services. Disney’s average revenue per user for Disney+ also fell 5% in the quarter in the U.S. and Canada due to more customers accepting cheaper multi-product offerings.

Starting December 8 in the US, Disney+ with ads will cost $7.99 per month — currently the price of Disney+ without ads. The cost of ad-free Disney+ will rise 38% to $10.99 — an increase of $3 per month.

Disney also posted better-than-expected earnings on both the top and bottom lines, boosted by increased spending at domestic theme parks.

Here are the results:

• Earnings per share: $1.09 per share versus expectations of 96 cents, according to a Refinitiv survey of analysts
• Income: $21.5 billion versus an estimate of $20.96 billion, according to Refinitiv
• Total Disney+ Subscriptions: 152.1 million versus 147.76 million expected, according to StreetAccount

Disney’s Parks, Experiences and Products division saw revenue rise 72% to $7.4 billion in the quarter from $4.3 billion in the same period last year. The company said it has seen increases in attendance, room nights occupied and cruise ship sailings.

It also touted that its new Genie+ and Lightning Lane products helped boost average ticket revenue per capita in the quarter. These new digital features were introduced to prepare the guest experience and allow park visitors to bypass the lines for the main attractions.

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