It had bet its future on building a streaming service to rival Netflix as viewers moved from traditional TV to online viewing.
The Walt Disney Company has surpassed Netflix Inc. with a total of 221 million streaming subscribers and announced that it will increase prices for customers who want to watch Disney+ or Hulu without commercials.
The media giant will increase the monthly cost of Disney+ without ads by 38 percent to $10.99 in December, when it begins offering a new option that includes ads for the current price.
Shares of Disney rose 6.9 percent to $120.15 in after-hours trading on Wednesday.
In 2017 Disney bet its future on building a streaming service to rival Netflix as viewers moved from traditional cable and broadcast television to online viewing.
Five years later, Disney has surpassed Netflix in total streaming subscribers. The Mouse House added 14.4 million Disney+ subscribers, beating the consensus of 10 million expected by analysts polled by FactSet, as it released the Star Wars series Obi-Wan Kenobi and Marvel’s Ms. Along with Hulu and ESPN+, Disney said it had 221.1 million streaming subscribers at the end of the June quarter. Netflix said it has 220.7 million streaming subscribers.
Current Disney+ customers will start getting the ad-supported version, unless they agree to pay more for the commercial-free plan.
“While Netflix is struggling to add more customers, Disney is gaining market share,” said Investing.com analyst Haris Anwar. “Disney still has more room to grow in international markets where it is rapidly launching its service and adding new customers.”
To help attract new customers, Disney will offer an ad-supported version starting December 8 for $7.99 per month, the same price it now charges for the commercial-free version, the company said. . The ad-supported tier is introduced to generate more revenue by giving customers the choice of how much they want to pay for the service. Hulu prices will increase from $1 to $2 per month in December, depending on the plan.
Disney said last month it sold $9 billion worth of ads for the upcoming TV season, 40 percent of which went to its online offering.
loss of cricket rights
The company on Wednesday lowered its long-term customer forecast for Disney+ customers, blaming the loss of cricket rights in India.
Disney now projects between 215 million and 245 million total Disney+ subscribers by the end of September 2024. That’s less than the 230-260 million that Disney was forecasting.
The adjustment comes from lowered expectations for India, where the company is losing streaming rights to Indian Premier League cricket matches.
For the first time after hours, Disney took the guesswork out of the rest of Disney+ for Disney+ Hotstar customers in India.
Chief Financial Officer Christine McCarthy said Disney expects to add 80 million Disney+ Hotstar subscribers and between 135 million and 165 million others by September 2024.
McCarthy said the company still expects its streaming TV unit to turn a profit in fiscal year 2024. In the most recent quarter, the division lost $1.1bn.
For the fiscal third quarter ended July 2, Disney posted adjusted earnings per share of $1.09, up 36 percent from a year earlier, as visitors packed its theme parks. Analysts polled by Refinitiv had expected earnings of 96 cents. Operating income in the Parks, Experiences and Products division more than doubled to $3.6bn.
Streaming losses put pressure on the media and entertainment unit, whose profit declined 32 percent to nearly $1.4 billion. Overall revenue rose 26 percent to $21.5bn from a year earlier, ahead of the analyst consensus of $20.96bn.