The Walt Disney Company is closing the gap to Netflix in the subscription-based streaming war. The House of Mouse has nearly 174 million total subscribers across its portfolio of streaming services, Disney CEO Bob Chapek said during the company’s latest earnings call on Aug. 12. For comparison, Netflix closed the second quarter with 209.2 million subscribers.
The key numbers:
- $17 billion in total revenue, up 45% year over year
- $7 billion in revenue from linear TV networks, up 16% year over year
- $4.3 billion in revenue from direct-to-consumer streaming services, up 57% year over year
- 116 million subscribers to Disney+, up 12% from the prior quarter
- 14.9 million subscribers to ESPN+, up 8% from the prior quarter
- 42.8 million subscribers to Hulu, up 3% from the prior quarter
Benefits of the bundle
While Disney continues to add streaming subscribers, there remains a significant gap between Netflix and Disney’s flagship streamer Disney+, which has 93.2 million fewer subscribers than Netflix. But unlike Netflix, Disney’s streaming business isn’t limited to a single service.
Between Disney+, ESPN+, and Hulu, Disney had 173.7 million subscribers, as of July 3. That’s a 71% increase year over year and a 9% increase quarter over quarter.
In addition to selling standalone subscriptions to each streamer, Disney also sells a bundled subscription that spans Disney+, ESPN+ and Hulu. The company does not break out how many people are paying for the bundled subscription, but during the earnings call, Chapek hinted at how the bundle is helping Disney to snowball subscribers.
“While we enjoy extremely low churn rates on our individual services, the churn rates on the bundle are even lower, surprisingly low even for us,” Chapek said, without providing specific numbers.
Given that performance, it’s perhaps not surprising to hear that Disney is working to push more people to its streaming subscription bundle. “A good chunk of our marketing is now going towards the bundle,” said Chapek.
Another type of streaming bundle helped to catalyze Disney+’s subscriber growth in the company’s most recent quarter.
In April 2020, Disney combined Disney+ and Indian streaming service Hotstar — which Disney acquired through its ownership of 21st Century Fox — and has expanded the combined service beyond India to countries including Malaysia.
Disney+ Hotstar subscriptions account for “a little less than 40% of our total Disney+ subscriber base,” said Disney CFO Christine McCarthy during the company’s earnings call.
Not only is Disney+ Hotstar a significant slice of Disney+’s subscriber base, but it was also responsible for “the majority” of the new subscribers that Disney+ gained in the latest quarter, said McCarthy. She noted Disney+ subscriber growth in non-Hotstar markets maintained the same rate as the previous quarter but did not provide specifics.
Hulu’s live TV service sheds more subscribers
Not all areas of Disney’s streaming business are on an upswing, though. While Hulu’s overall subscriber base ticked up by 3% from the prior quarter to reach 42.8 million subscribers, its streaming pay-TV service lost 100,000 subscribers between April and June after having shed 200,000 subscribers in the previous three-month period.
In other words, Hulu’s pay-TV subscriber base has shrunk from 4 million subscribers, as of Jan. 2, to 3.7 million subscribers, as of July 3. That correlates pretty closely with Disney raising the monthly subscription price of Hulu’s pay-TV service from $54.99 to $64.99 in December 2020.
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