Disney now has a total of some 221 million subscribers across its streaming platforms, edging past Netflix and maintaining its growth as competitors struggle with retaining customers and managing costs.
The entertainment giant’s flagship streaming service, Disney Plus, added 14.4 million subscribers between April and early July, which chief executive Bob Chapek highlighted as part of an “excellent” quarterly performance. To capitalize on the growth, Disney Plus will raise its monthly subscription fee by $3 to $10.99 for U.S. users this December. It is also creating an ad-supported tier that costs $7.99.
The company expects the ad-supported tier to be popular, chief financial officer Christine McCarthy said on a call with analysts. Kareem Daniel, another top Disney executive, said the two-tier pricing system allows Disney to provide “greater consumer choice at a variety of price points to cater to the diverse needs of our viewers and appeal to an even broader audience.”
Disney Plus now has 152 million paying users, up 31% from a year ago. Some of the growth can be attributed to strong performance outside the West, and Chapek said the platform places an emphasis on featuring global celebrities such as South Korean supergroup BTS.
Despite Disney’s strong showing, executives revised their projections for Disney Plus downward. The company now expects up to 245 million subscribers by 2024, down from the previously forecast 260 million, though it says the service will still be by profitable by that year. Losing streaming rights to Indian Premier League cricket matches – a popular sports franchise in a country that drives much of Disney Plus’s international expansion – is a significant blow to the company.
Other major streaming platforms have struggled to retain customers in a turbulent economic environment. Netflix has been hemorrhaging subscribers this year, with a loss of 200,000 in the first quarter and an additional 970,000 over the following three months. It now has 220.7 million subscribers. The streaming giant has laid off at least 450 U.S.-based employees this year to cut costs; those who lost their jobs included employees at Tudum, a website Netflix launched less than a year ago to showcase behind-the-scenes content for fan-favorite shows.
A standard Netflix subscription costs a little over $15 a month in the United States, making it one of the more expensive general entertainment streaming services. Analysts attribute the decline in Netflix subscribers to the prevalence of password sharing, its withdrawal from the Russian market following the invasion of Ukraine and consumer concerns about the economy.
Disney stock rose by 6.85% to $120.13 during after-hours trading in New York.