Why Disney+ Suffered First-Ever Decline In Subscribers

No streamer is immune from the subscription losses that have plagued the services in the post-COVID era. But Disney knew going into today’s fourth quarter earnings call that it would be announcing its first-ever decline in subscriptions.

Indeed, the service lost 2.4 million subscribers from its worldwide roll, marking the first time since its launch in November 2019 that it has recorded a drop in subscriptions. The news was expected, though Disney+ suffered a bigger decrease than analysts had anticipated.

It marked the first time Bob Iger had presented the results since returning to the CEO role late last year, following the board’s ouster of Bob Chapek. Iger addressed the Disney+ subscriber drop amid other questions about concerns that led to Chapek’s dismissal.

Investors appeared placated. Disney stock rose in after-hours trading, buoyed by the news that the company had beaten earnings projections.

So why the Disney+ drop? Iger attributed it wholly to losses suffered by Disney+ Hotstar, which is the Southeast Asian/Indian version of the streaming service. Last year, it suffered a massive setback when it lost streaming rights to Indian Premier League, the hugely popular cricket league in India. After that setback, Disney had lowered growth projections for the Disney+ Hotstar service and prepped investors for a decline, though it was a bit more than the company thought.

Still, Disney+ did show continued promise domestically. Subscriptions were up by 200,000 in the U.S. and Canada, plus other Disney-owned streamers (Hulu and ESPN+) were up by 800,000 and 600,000, respectively.

Disney+ now has 161.8 million subscribers, including Disney+ Hotstar subscriptions. That’s well behind industry leader Netflix, though Disney has argued before that it paces ahead when you include Hulu and ESPN+ with those numbers.

Netflix recently reported better-than-expected growth, adding an eye-popping 7.7 million subscribers in fourth quarter, with some crediting the new ad-supported tier, which is cheaper than other Netflix offerings, with driving that rise.

Still, all the streamers have experienced ups and downs associated with the new world of programming. It’s easy for consumers to drop streaming services from month to month based on what’s offered. If, for instance, you subscribe to Netflix just for Stranger Things, then you can cancel it between the show’s seasons.

Disney+ has seemed more immune to such seasonal shifts in subscriptions than other services, though. Its vast library of family content makes it ideal for subscribers with young children. And the Star Wars and Marvel franchise programs have offered reliable draws.

By that same token, while losing a prominent rights deal can send subscriptions plunging, gaining one can also turn that around. Disney+ will continue looking for new ways to reignite interest in the service.

The next quarter will prove interesting for Disney+ subscriptions in the U.S. The streamer launched its own ad-supported tier in December, but executives said during the call there hadn’t been a “meaningful financial impact” from it yet, though they were happy with the initial results.

It’s a big test of the streaming model, part of whose initial appeal was the lack of ads, to see if people will subscribe to these lower-priced ad tiers. It also speaks to how far streaming has come that it can move beyond that initial draw to circle back to adding the thing that once set it apart.

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