Disney Plus adds 8 million subscribers – but it’s still running at a loss

Disney +

Disney +
Photo: NICK AGRO / AFP via Getty Images

When Disney first launched its streaming service Disney + back in November 2019, it did so with a long-term mindset. Streaming was presumably, the future, and therefore the company was willing to burn a lot of money off to catch up with more established artists in the industry – especially Netflix, the biggest of the big kids on the block. After all, no one in the industry has money to burn like Disney.

Fast forward to this week, and reveal it Disney + has scored a remarkable victory over his greatest rival, with The edge reporting that Disney + logged nearly 8 million new subscribers over the last quarter, a period that saw Netflix is ‚Äč‚Äčlosing paid users – and with them a healthy share of the stock price.

This is according to the release of Disney’s latest quarterly income statement, always a great day for anyone who wants to hear companies give the cheerful possible analysis of their own financial fortunes. Cue the new Disney boss Bob Chapek, who also lamented that together, all of Disney’s streaming services now have a total of 205 million subscribers. Which sounds like a lot until you remember that Netflix – poor, humiliated Netflix – has a place near 222 million, which, even with the latest dips, is consolidated into a single service instead of being shared between Disney +, Hulu and ESPN.

When we dig into the report, we find that Disney + itself – including national and international subscribers and users of Hotstar (which operates from India and delivers Disney + content to a number of Southeast Asian countries where the standard service does not work) –a total of 137.7 million subscribers. In the US and Canada, that number is only 44.4 million, still 30 million less than what Netflix sports domestically. Which for the most part is just a reminder that what investors really like is not raw numbers, however growth (and met expectations); despite backlogs, Disney added subscribers over the past yearwhile Netflix lost some, so this can be easily spun into a win for the mouse.

In the same way, the company continues to operate largely unconcerned with the fact that its digital offering works not only with loss, but with a increasing one; Although revenue increased during the quarter, expenses increased even more, meaning that Disney lost $ 0.9 billion on streaming over the past three months (up from $ 0.6 billion in the previous quarter). As we said before, the company has always been up front about how expensive it would be to get into streaming, but it’s a thoughtful reminder that not even Disney can make money out of nothing. Among other things, the company allegedly had to eat a loss of a billion dollars in fines because it made a deal with a customer who licensed its content, presumably to be able to supply that material to Disney + instead.

The result of all this is that gains in the streaming world are often about optics as much as hard numbers; Disney can cheerfully swallow losses like this because it can, yes, literally afford. Still, the company is apparently pushing to get an ad-supported streaming level (which at the same time will break with the number of subscribers and get it some pre-ad revenue) put together for the streaming service soon.

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