Disney+ growth slows during the fiscal fourth quarter; Netflix extends its lead

Red hot streaming service Disney+ continued to show growth during the fiscal fourth quarter, although that growth is slowing. For the three-month period running from July through October 2nd, Disney reported that it added 2.1 million subscribers to its streaming service. On a sequential basis, that is down sharply from the 12.6 million subscribers that were added to Disney+ during the fiscal third quarter.

Including Indian subscription video-on-demand service Hotstar, Disney+ had 118.1 million subscribers at the end of the fiscal fourth quarter. Global average revenue per user was $4.12, down from the $4.62 recorded during the same quarter last year. The platform has been streaming popular shows starring characters from the Marvel Cinematic Universe (MCU) such as WandaVision and Loki. In September Disney CEO Bob Chapek correctly warned investors to expect an increase in the "low single-digit millions" for the fiscal fourth quarter, and he was right.

Wall Street analysts forecast that Disney+ will add 8.1 million net new subscribers during the current fiscal first quarter of 2022 with subscriber count expected to reach 126.2 million. It took Disney+ just 16 months to reach 100 million customers, and the pandemic could be resulting in a slowdown in growth for the app.

Chapek said, "As we celebrate the second anniversary of Disney+, we're extremely pleased with the success of our streaming business, with 179 million total subscriptions across our DTC (Direct to consumer which includes ESPN+ and Hulu) portfolio at the end of fiscal 2021 and 60% subscriber growth year-over-year for Disney+. We continue to manage our DTC  business for the long term and are confident that our high-quality entertainment and expansion into additional markets worldwide will enable us to further grow our streaming platforms globally.

Disney is looking to add subscribers with a "Disney Plus Day" promotion that coincides with the streaming operation's second anniversary. The event will run for a week and it started last Monday. It allows new and existing members to receive one month of service for $1.99. After the month is over, service will cost $7.99 per month or $79.99 on an annual basis.

Disney also offers ESPN+ and Hulu with the former rising to 17.1 million subscribers from 10.3 million last year. The latter saw its subscriber count hit 43.8 million from 36.6 million last year.

Netflix is the world's top streamer and Disney+ is trying to surpass it. For the third quarter of this year, the company had 74.02 million subscribers in the U.S. and Canada. During the third quarter, Netflix's global subscriber base hit 214 million subscribers giving it the global lead. ARPU for the U.S. and Canada during the third quarter was $14.68, up 14 cents.

Netflix had a nice quarter adding 4.4 net new global subscribers during the third quarter compared to just 1 million net additions during the previous three months. In the U.S. and Canada, only 70,000 net new subscribers were added during the third quarter. The number one global video streamer expects 8.5 million net new subscribers for the current quarter thanks to the "Squid Game" and "Tiger King 2."

Other streamers include NBCUniversal's Peacock with about 54 million subscribers in July. WarnerMedia’s HBO and HBO Max reported 69.4 million global customers for the third quarter (up 1.9 million on an annual basis), and 45.2 million domestic subscribers (down 1.8 million subscribers). Domestic ARPU was down 8 cents for the quarter at $11.82.

ViacomCBS saw the number of subscribers rise 4.3 million during the third quarter to 47 million on a global basis. Pluto TV, part of ViacomCBS streaming, reported over 54 million monthly average users for a 2.1 million gain for the quarter.