DISNEY+ has 55% of NETFLIX’s subscriber count, but just 19% of its revenue
The 12.4 Million DISNEY+ subscriber additions in Q2 are not what they seem.
There were a lot of impressive “year-over-year increase” numbers cited in coverage of the DISNEY+ subscribers update this week, the biggest being over 100% growth in total subscribers from last July, to a new high of 116 Million globally. Meaning DIS+ added 12.4 Million since early April to the start of July.
However… Buried in these great sounding numbers is a more stark reality about how much actual $$ DISNEY is actually making from it’s subscribers, especially vs. it’s main competitor NETFLIX:
Total DISNEY+ Q2 revenue: $1.46 Billion
Total NETFLIX Q2 revenue: $7.3 Billion, or 5X as much
ALSO: The HULU business still brings in far more $$ than DISNEY+, roughly $2.5 Billion in Q2.
AND: Even HULU SVOD alone made more revenue in the US, than DISNEY+ made globally in Q2 ($1.54 Billion to $1.45 Billion).
ALTHOUGH: DISNEY+’s revenue growth rate from Q1 to Q2 was 16%, so it should surpass HULU SVOD by end of year.
SO ABOUT THOSE 12.4 MILLION NEW DISNEY+ SUBSCRIBERS…
The “bulk” of that new subscriber growth was from INDIA, where the service is called DISNEY+ HOTSTAR, and as I dove into this week, they charge as little as $7 to $12 a year for DISNEY+, with the most “expensive” plan being $20 a year.
That’s clearly a different and far less profitable business model than any NETFLIX or HBOMAX region worldwide including NETFLIX INDIA, whose base plan costs $30 a year - over 4X more than DISNEY+ HOTSTAR.
Also worth noting: DISNEY+ PREMIERE ACCESS rentals (“Black Widow”, “Cruella” etc) are not available to the DISNEY+ HOTSTAR subscriber base.
INDIA now makes up “just under 40%” of the 116 Million DISNEY+ total. Let’s give a benefit of the doubt and say the number is 38%. This would mean 44 Million DISNEY+ Subscribers are from INDIA.
Given that DISNEY+ HOTSTAR reportedly had 34 Million subscribers back in the Spring, this would mean that about 10 Million of the 12.4 Million Q2 DIS+ growth came from INDIA.
SO - just 2.4 Million of the Q2 new DISNEY+ subscribers came from the US, EUROPE and LATIN AMERICA combined which… sounds a lot less impressive.
Even more so given that DISNEY did not break out a US Subscriber number, or US growth specifically. Something that NETFLIX does every quarter.
HOWEVER it is worth noting that:
DISNEY+’s Average Revenue Per User (ARPU) did finally grow from Q1 to Q2, increasing from $3.99 a month to $4.16.
That’s the first quarterly DIS+ ARPU increase since the service launched: it had previously fallen every quarter since launch, when ARPU was $5.56.
This ARPU increase is mainly due to DIS+ raising prices by about a $1 /month in its most lucrative territories (US & EUROPE) to try and offset that low DISNEY INDIA revenue.
Note: NETFLIX ARPU is roughly 3X DISNEY+ ARPU.
BUT: The overall $$ losses at DISNEY+ continued to increase in Q2, even though overall losses in the DISNEY Streaming division were cut in half to about $300 Million in Q2 #ThanksHulu!
So while some like CNBC may see DISNEY+’s 12.4 Million Q2 subscriber adds as a “win” over NETFLIX’s 1.5 Million, when 1/3 of your subscriber base is paying you very little $$ each month vs. your “competitors”, is this even really an apt comparison anymore?
OTHERWISE IN DISNEY STREAMING
OVER AT HULU:
HULU’s main SVOD service added 1.3 Million subscribers to hit 39.1 Million (US based) subscribers, and increased ARPU by about $1 / month to $13.15. This is more $ than HBOMAX, and very close to NETFLIX. HULU SVOD is doing very well.
HULU + LIVE TV… not as much. They lost another 100k subscribers to the streaming cable bundle service, and now stands at 3.7 Million. This peaked at 4.1 Million last October and has been decreasing ever since.
But they are selling a ton of ads at good rates, increasing ad revenue per user about $2 from April to July so they are a big beneficiary of the move to Digital Video advertising.
AND AT ESPN+:
They added 1.1 Million subscribers from April to July, hitting 14.9 Million. But ESPN+ ARPU decreased slightly from $4.55 to $4.47, the first time that’s happened more than 2 cents here and there.
THE BIG PICTURE:
DISNEY’s traditional Linear TV & Cable businesses are doing solid business both Domestically & Internationally, the Theme Parks to no surprise continue to bounce back, and HULU is doing very well, so the overall DISNEY business is looking good… although TBD where the Delta variant brings things this Fall.
But in Streaming - even though Wall Street continues to give love to the overall subscriber number growth… when you look at the $$ DISNEY+ is generating, it’s a way different story than their 2 biggest competitors NETFLIX & HBOMAX (sorry AMAZON & APPLE TV - different business models and also you folks don’t report #s, and PARAMOUNT+ and PEACOCK are not in the same league yet).
So while huge subscriber counts are great, unfortunately Jon Favreau prefers to be paid in tens of millions of dollars, and it costs DISNEY+ just as much money to make content as it does anyone else. Revenue matters.
AND TO NOTE: One of the main draws for the India DISNEY+ HOTSTAR service is their the streaming rights to Cricket’s most popular league, the IPL. Those rights are up for a bidding war renewal next year.
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