The Walt Disney Co. adjusted its outlook for how many streaming subscribers it will have from the targets it originally set when it launched Disney Plus.
The company originally said that it expected to have between 230 million and 260 million subscribers worldwide by 2024.
On Wednesday's third-quarter earnings call with analysts, CFO Christine McCarthy broke up the sub count, separating Disney Plus and Hot Star in India.
McCarthy said that "core" Disney Plus has a target range of 135 million to 165 million global subscribers by the end of fiscal 2024. She called that number "largely consistent" with previously provided guidance that non-Hotstar Disney Plus subscribers in 2024 would account for 60% to 70% of the total subscriber base.
She said Hotstar would have up to 80 million subscribers, leaving the new total at 215 million to 245 million subscribers.
In India, Disney was outbid for the streaming rights to cricket, the most popular sport there.
"We intend to refine this target over time as subscriber visibility in India will be clearer once the ICC and BCCI cricket rights sales processes are completed," McCarthy said.
She said that in the current fiscal fourth quarter, Disney expects Disney Plus core net additions to accelerate modestly, particularly in the domestic market.
Disney's announcement follows a drop in subscribers at Netflix that had Wall Street reexamining its expectation for the streaming business that sent media company stocks plummeting.
But the market seemed to take Disney's announcement in stride. In after-hours trading, Disney stock was up more than 6%.
McCarthy also said that Disney remains confident that Disney Plus will achieve profitability in fiscal 2024 and that peak streaming losses will be in the current fiscal year.
Cash content spend across Disney is expected to be $30 billion for fiscal 2022, down slightly from previous guidance, she said.
Disney’s ability to add subscribers will be affected by the launch of the ad-supported version of Disney Plus and by a round of price increases for Disney’s streaming products.
Disney CEO Bob Chapek, speaking on the earnings call, noted that Disney Plus had launched at a very low price point. "I think it’s easy to say we’re probably the best value for streaming," he said.
"We believe that because of the increase in the investment over the past two and a half years, relative to a very good price point, that we have plenty of room on price value," Chapek said. "And we do not believe that there's going to be any meaningful long-term impact on our churn as a result. I mean, one only needs to look at our recent significant increase on ESPN Plus, which had really no meaningful impact at all on our churn. And we believe that we've got plenty of price value room left to go."
The ad supported version of Disney Plus will launch December 8. McCarthy said that Disney Plus will have a lower ad load and lower ad frequency than Hulu.
"But because of that disciplined, lower ad load, lower frequency, and the strong advertising demand that we've had, that translates into some of the ... industry-leaning CPM rates at the most-recent upfront for Disney Plus," she said.
McCarthy said that Disney intends to take the ad-supported version of Disney Plus international sometime next year.
"We've built these strong advertising relationships around the world with our previously existing and currently existing linear footprint, so we're confident in our ability to navigate the international advertising marketplace, given our depth of knowledge and experience with the traditional linear business," she said.
Chapek added that Disney Plus will run on a completely different ad tech platform from Hulu.
"While we certainly have tremendous learnings over the years, in terms of how to do addressable advertising and we've done that at the advantage of our shareholders results, I will have to say that we are not encumbered by that or in any way limited by what we've done in the past," Chapek said. "Therefore, we could have, you know, an ad proposition as good as the one we had on Hulu, but could actually be better because of that different technology platform." ■
