Those 28.6 Million Disney+ Subscribers Come With a Big Asterisk

Disney stock earnings call netflix subscribers
Disney+ races to a blistering start on the back of The Mandalorian. Disney+

Netflix, the market leading streaming service that first entered the original content realm in 2012, boasts around 60 million subscribers in the United States. Disney+, which launched Nov. 12 and is available domestically and in the Netherlands, has already garnered 28.6 million paid subscribers, putting the new direct-to-consumer platform on pace to surpass all expectations.

Disney CEO Bob Iger announced the impressive total on Tuesday’s earnings call, which also included revenue growth in overall earnings to $28.6 billion. The report revealed that fellow over-the-top services under the Disney umbrella such as Hulu (30.4 million subscribers) and ESPN+ (6.6 million) have exceeded growth projections as well. This momentum was largely driven by the enticing $12.99 bundle Disney offers to its U.S. subscribers for all three services.

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With just one marquee original series (The Mandalorian) flanked by high-profile branded content, the launch of Disney+ has been a smashing success thus far.

“It’s an impressive quarterly report from Disney in the company’s first report since launching its eponymous streaming service,” Haris Anwar, analyst at financial markets platform, told Observer. “It’s not only succeeding in attracting more subscribers to its Disney+ app, but also ensuring strong momentum from its legacy businesses. It’s a winning combination, and more importantly it proves the company has a solid strategy to build a competitive streaming video product which can challenge its rivals, including the incumbent Netflix.”

Netflix isn’t suddenly going to fall at the feet of this would-be usurper. The streaming service still boasts a significant lead in domestic subscribers and unmatched investments in international regions. As a family-friendly streaming service still in its infancy, Disney+ has neither the versatility nor the original library to compare with Netflix’s one-stop-shop sea of content just yet.

But Disney executives expect Disney+ to see another surge in sign-ups in advance of the highly anticipated launch of several new Marvel blockbuster series later this year. The streamer is also developing a handful of Lucasfilm Star Wars series to join The Mandalorian. Christine McCarthy, Disney’s chief financial officer, noted on the call that the company expects a significant portion of its growth to come from international subscribers. Disney+ will launch in Europe in two months and hopes to be worldwide within two years. It’s all a part of Disney’s strategic shift to emphasize direct-to-consumer business as the top priority moving forward.

“Disney+’s unprecedented subscriber growth is impressive, albeit not surprising given their commitment to capturing the streaming opportunity,” Ian Morris, CEO and co-founder of entertainment app Likewise, told Observer. “Combining their unmatched stable of content with highly aggressive pricing, demonstrates that they are playing the long game and are committed to do what it takes to lead the rapidly evolving streaming space.”

Disney executives reportedly projected growth of between 60 million and 90 million subscribers by 2024. At this rate, Disney+ is on pace to far exceed even the boldest estimates. However, it’s important to note that Disney offered a 12-month free subscription to roughly 20 million Verizon customers as part of its launch. About 20% of Disney+ subscriptions, or roughly 6 million, came from Verizon. Churn, or the rate of customers who sign up and then cancel their subscriptions in a given period, will be a crucial metric to track. Just how many of these free users Disney+ can retain long-term will speak volumes about the service’s viability and growth rate. Those 28.6 Million Disney+ Subscribers Come With a Big Asterisk