Disney, known for Pixar, Star Wars and Marvel films, said its flagship streaming service lost 4 million subscribers in the first three months of the year.
Subscribers to Disney+ services, home to movies such as Toy Story, Monsters, Thor and Black Panther, fell to nearly 158 million from January to March, the second quarter of customer losses after a net loss of 2.4 million in the previous three months. Analysts had expected Disney to add more than 1 million customers in the quarter. The shares fell nearly 5% in after-hours trading.
Most of the lost subscribers came from Disney+ Hotstar in India after the company lost streaming rights to Indian Premier League cricket matches. Disney also lost 300,000 customers in the US and Canada, after raising subscription prices in December.
The number of UK households subscribing to Disney+ has steadily increased in recent years, climbing to 6.1 million customers in the first quarter, while the industry leader Netflix has nearly 15 million subscribers in the UK, according to the media research firm Ampere Analysis. Disney+ costs £7.99 a month in the UK, or a yearly fee of £79.90.
All major streaming services have been losing customers as the pandemic boom fades and the cost of living crisis hits. British households stopped paying for almost 170,000 streaming services at the start of the year in a post-Christmas “subscription cull”, according to the research firm Kantar.
At the same time, Disney’s streaming business reported a better financial performance. It reduced its operating losses to $659m (£523m), from $1.1bn a year earlier, after price increases and reduced spending on marketing.
Disney’s theme parks fared better, as higher visitor numbers in Shanghai, Paris and Hong Kong lifted operating income at the division by 23% year on year to $2.2bn. Operating income at its traditional television business fell 35% to $1.8bn.
The company intends to launch a new app later this year that will combine the family-friendly Disney+ and the Hulu general entertainment service.
The chief executive of Walt Disney, Bob Iger, said the app would streamline the viewing experience for subscribers and offer more opportunities for advertisers. An ad-support option will also be added to Disney+ in Europe by the end of the year.
Iger, who came out of retirement in November to return as chief executive for two years, told analysts: “We’ve only just begun to scratch the surface of what we can do with advertising on Disney+.”
He announced a large cost-cutting drive in February to save $5.5bn, partly through 7,000 job cuts. The firm now expects to achieve even bigger savings.
Disney and others have invested billions of dollars into streaming services in recent years to compete with Netflix, which has 232.5 million subscribers.
Iger recently suggested that Disney needed to get “better at curating” franchise content such as Star Wars and Marvel because it was “extraordinarily expensive”.
The news came after thousands of Hollywood screenwriters in the Writers Guild of America staged their first strike in 15 years last week. They are demanding better pay and working conditions, as the streaming boom has affected the traditional television and film industry. The strike forced Disney to pause productions for Marvel’s Blade and the Star Wars series Andor.
