Disney Plus adds 8 million subscribers—but it's still operating at a loss

Disney Plus adds 8 million subscribers—but it’s still operating at a loss

Disney+

Disney+
Photo: NICK AGRO/AFP via Getty Images

When Disney first launched its streaming service Disney+ back in November of 2019, it did so with a long-term mindset. Streaming was, presumably, the future, and so the company was willing to burn a lot of money to catch up with more established performers in the industry—most notably Netflix, the biggest of the big kids on the block. After all: Nobody in the industry has money to burn like Disney.

Fast-forward to this week, and the reveal that Disney+ has scored a notable win over its biggest rival, with The Verge reporting that Disney+ logged almost 8 million new subscribers over the last quarter, a period that saw Netflix lose paid users—and with them, a healthy chunk of its stock price.

This is per the release of Disney’s latest quarterly earning statement, always a big day for anyone who wants to hear companies give the cheeriest possible analysis of their own financial fortunes. Cue new-ish Disney CEO Bob Chapek, who also crowed that, taken 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 somewhere in the neighborhood of 222 million, which, even with recent dips, are consolidated into a single service, instead of being split between Disney+, Hulu, and ESPN.

Digging into the report, we learn that Disney+ itself—including domestic and international subscribers, and users of Hotstar (which operates out of India and serves Disney+ content to a number of Southeast Asian countries where the regular service doesn’t operate)—totals 137.7 million subscribers. In the US and Canada, that number is just 44.4 million, still 30 million less than what Netflix sports domestically. Which is mostly just a reminder that what investors really like is not raw numbers but growth (and managed expectations); despite trailing, Disney added subscribers over the last yearwhile Netflix lost some, so this can easily be spun into a win for the Mouse.

Similarly, the company continues to seem largely unworried by the fact that its digital offerings aren’t just operating at a loss, but at an increasing one; although revenues were up for the quarter, expenses were up even more, meaning Disney lost $0.9 billion on streaming over the last three months (up from $0.6 billion the previous quarter). As we said before, the company has always been up front about how expensive getting into streaming would be, but it’s a sobering reminder that not even Disney can make money out of nothing. Among other things, the company reportedly had to eat a billion dollar loss in penalties paid because it cut a deal with a customer licensing its content, presumably so that it could feed that material to Disney+ instead.

The upshot of all this is that wins in the streaming world are often about optics as much as hard numbers; Disney can cheerfully swallow losses like this because it can, well, literally afford to. Even so, the company is apparently pushing to get an ad-supported streaming tier (which will simultaneously goose subscriber numbers and get it some up-front ad revenue) put together for the streaming service soon.

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