Disney+ subscriber growth slowed notably in latest quarter, putting pressure on the company.
Some animated films that were originally supposed to play in theaters — for instance, “Luca” and “Soul,” both from Pixar — were rerouted to Disney+ entirely during the pandemic. But Disney has ended that practice, at least for the time being.
“Encanto,” an animated musical set in the mountains of Colombia, will arrive in theaters on Nov. 24 and on Disney+ a month later. The company views “Encanto” as a crucial test. Will most families rush out to theaters to see it (especially now that children can be vaccinated), ultimately denting demand online? Or will they instead wait for the Disney+ debut, resulting in lower-than-expected box office sales?
Or will the film generate sizable interest in both venues?
Like other media companies, Disney has turned to streaming because cable television is in long-term decline. More and more, people are forgoing cable hookups in favor of streaming options. Hulu, another Disney-owned streaming service, expanded its subscriber base to 43.8 million in the most recent quarter, an increase of only one million since late June. About 17.1 million people pay for access to the company’s sports-focused ESPN+ platform, up from 14.9 million at the end of June.
A variety of costs (content production, marketing, technology infrastructure) contributed to losses of roughly $600 million for Disney’s streaming unit; losses totaled $400 million in the same quarter a year ago. Disney’s chief financial officer, Christine M. McCarthy, told analysts on Wednesday that Disney+ losses would peak in 2022 — instead of 2021 — because of pandemic-related disruptions to the service’s content pipeline.
In total, Disney generated $18.5 billion in revenue, a 26 percent increase from a year earlier, when many theaters were closed because of the pandemic and Disney theme parks were closed or operating with reduced capacity.
Profit in the quarter, the fourth in Disney’s fiscal year, totaled $160 million, or 9 cents a share. A year ago, Disney lost $710 million, or 39 cents a share.