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Disney’s streaming growth disappoints in its latest quarter

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Subscription growth at Walt Disney’s flagship video streaming service, Disney Plus, slowed in its fourth quarter, disappointing Wall Street and raising concerns that it has stalled after a blistering start during the depths of the Covid-19 pandemic.

Total Disney Plus subscriptions rose to 118m in the quarter, up 60 per cent from a year earlier — but below targets of 119.6m. It added 2.1m subscribers in the three months to October 2.

Bob Chapek, chief executive, has said that achieving strong growth at the streaming service was the company’s top priority as it sought to compete with Netflix.

Mike Proulx, research director at Forrester Research, said Disney Plus faced increased competition from rival services in the quarter.

“There are more choices in streaming content, and consumers only have so much budget to spend,” he said. “The other factor is Covid-related production issues. There was a slowdown in the amount of original content they could put out.”

The company said it was increasing its long-term spending on new content for the service, which Chapek said should help boost subscriber growth in the second half of 2022.

Disney also expects a stronger pipeline of new content now that the worst of the Covid-19-related film and television production delays are over. The company plans to showcase new titles for Disney Plus on Friday.

Chapek said he was confident that Disney would reach its target of securing as many as 260m global subscribers for its video streaming service by 2024.

Most of Disney’s businesses were hurt by Covid-19, which forced the closure of its theme parks and cruise lines, shut down movie theatres and halted work on films and TV.

With most of those operations at least partially reopened, the company returned to profit in its fourth quarter. A strong theatrical showing by the superhero film Shang-Chi and the Legend of the Ten Rings helped in the fourth quarter, but the most dramatic swing was at theme parks, which had operating income of $640m, compared to a loss of $945m a year earlier. However, those results also fell below Wall Street’s targets.

Company officials told investors that there will be a “prolonged pace of recovery” in theatrical releases, which will probably affect box office results.

Overall net income was $159m in the fourth quarter, compared to a $710m loss a year ago.

The disappointing results sent Disney shares down as much as 4.3 per cent to $166.90 in after-hours trading. The stock is down 1.82 per cent for the year.

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