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Investors fret over Disney subscriber dip

by LLB Reporter
11th May 23 9:55 am

The market reaction to Disney’s latest results was somewhat of a surprise, with the shares falling nearly 5% in after-hours trading.

One of the biggest gripes investors have had with the company is the fact its Disney+ streaming platform has been losing large amounts of money. News that the platform reduced its operating losses from $1.1 billion to $659 million quarter-on-quarter should have been seen as significant progress towards its goal of making Disney+ profitable. However, the market seems to have been fixated by the 4 million reduction in subscriber numbers.

AJ Bell’s Russ Mould said: “Given that most of the subscriber exits can be attributed to showing fewer Indian cricket matches, it hardly seems to be a disaster as it still has more than 231 million subscribers across its three platforms which includes ESPN+ and Hulu.

“The average monthly revenue per paid subscriber has increased by 13% across the Disney+ platform and there will always be some customers who don’t want to pay more for the service – the trick is keeping as many as possible and then having the right content to lure more people in.

“A new advertising-led subscription tier will be launched in Europe by the end of 2023 as a way of attracting more customers, but Disney did warn that prices for the advertising-free tier will go up again. That’s a bold move as it risks advertising-free tier customers downgrading their package to the cheaper tier – although early learnings from Netflix’s new cut-price advertising-led tier would suggest fewer people are switching packages than one might expect.”

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