Disney+ reported 73.7 million subscribers as of September 30, with ESPN+ topping 10 million for the first time.
ESPN’s tally of 10.3 million streaming subscribers was almost triple the level of a year ago, though average revenue per subscriber fell 12% to 4.54. (ARPU figures at ESPN do not include pay-per-view events, notably the company’s popular UFC offerings.) Hulu reported 32.5 million subscribers to its on-demand service and another 4.1 million to the Hulu + Live TV package. The total of 36.6 million subscribers was up 28% from the same period a year ago.
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Direct-to-Consumer & International revenue for the quarter increased 41% to $4.9 billion, while operating losses in the unit decreased from $751 million to $580 million. There were no figures in the earnings release for Mulan, which was released in September as a Premier Access title for $30 to all Disney+ subscribers.
In August, the company reported 60.5 million subscribers for Disney+, putting it already within the range of internal forecasts for subscribers within five years just eight months after launch. The bottom line, however, is a bit more problematic, with losses expected to continue on the streaming side until fiscal 2024.
The quarterly numbers were released on the one-year anniversary of the launch of Disney+, the most successful of the five billion-dollar-plus services that have hit the market to challenge Netflix over the past year. Apple TV+, HBO Max and NBCUniversal’s Peacock have seen varied results thus far and Quibi said last month it is shutting down after a six-month attempt to mount a mobile-only streaming offering.
While Apple went global right off the bat, Disney+ has executed a more gradual rollout in Europe, North America, Australia and key Asian territories like Japan. Next week, it will arrive in Latin America, including major territories like Brazil and Argentina. In India, it has gone out as an offering via Hotstar, the major distributor Disney acquired in the $71.3 billion Fox deal. In some parts of the world, like the Middle East and North Africa, Disney+ programming is licensed to pay-TV partners and the streaming service as of now is not up and running. Disney in December plans to reveal updated plans for Hotstar and the rest of its portfolio during an investor day presentation.
Hulu came under Disney’s full control in 2019, after the company bought out Comcast shortly and acquired 21st Century Fox’s stake. Hulu has continued to grow steadily, as has its industry-leading live TV package, but the 13-year-old streaming service has entered something of a transitional phase. Plans for its long-awaited international rollout were put on hold early this year due to COVID-19. Shortly before the pandemic swept through the U.S., Randy Freer exited as head of Hulu in a reorganization.
Freer’s duties were redirected to Kevin Mayer, who headed the company’s Direct-to-Consumer & International unit. Mayer then departed and another reorg last month centralized all distribution and gave oversight of Hulu to Kareem Daniel. Hulu’s programming mix has added adult-skewing fare from FX, though the integration of Fox TV development into Disney has not been a seamless process, according to insiders.
ESPN is at a similar crossroads. ESPN+ has grown, though most top-tier programming — especially big-ticket sports rights remains at the “mother ship” of ESPN. With pay-TV subscriber trends limiting ratings and advertising, few at Disney dispute the need to pivot to streaming at ESPN, but it will take some time to turn that battleship. ESPN chief Jimmy Pitaro says rights discussions with many partners are increasingly including ESPN+ components but the economics of sports may make streaming exclusives difficult to pull off at scale.
With COVID-19 gouging revenue in 2020 and even a resumed NBA season posting dramatic ratings declines, ESPN has had to retrench, as have other major sports entities. Earlier this month, it cut 500 positions, most of them in its traditional broadcast operation.
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