Disney+ got off to a strong start, surpassing 28 million subscribers within its first three months.
The company reported its fiscal first quarter earnings on Tuesday. Disney said it got 26.5 million paying subscribers in the quarter alone, which ended Dec. 28. As of Feb. 2, Disney+ has amassed 28.6 million subscribers. Disney did not break out how many are from the U.S. vs the international territories where it’s been made available, but he said the “vast majority” came from domestic.
Analysts had predicted that Disney+ would have somewhere around 25 million subscribers so far.
For the three months ending on Dec. 28, representing the company’s first fiscal quarter of 2020, Disney reported $20.86 billion in revenue, edging past analyst estimates of $20.79 billion. Disney also posted earnings per share of $1.53, which excluded certain items that affected comparability to prior quarters, which surpassed projections of $1.44 EPS.
“We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “Thanks to our incredible collection of brands, outstanding content from our creative engines and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment.”
In addition, Hulu subscribers surpassed 30 million (30.4 million), with 27.2 million subscribing to the SVOD version of Hulu and 3.2 million paying for Hulu Live TV. ESPN+ saw its subscriber count jump past 6 million, nearly double the 3.5 million that Iger reported during Disney’s last quarterly earnings.
Using the same Feb. 2 date, Iger said that ESPN+ now has 7.6 million subscribers, with Hulu at 30.7 million combined.
Disney began offering a three-in-one bundle for ESPN+, Disney+ and Hulu (SVOD) for $12.99 a month in November. ESPN+’s average monthly revenue per subscriber dropped a bit from a year ago, suggesting that many new subscribers came via the bundle.
Disney+ has an average subscriber monthly revenue of $5.56; the service costs $6.99 a month, but Disney offered a yearly rate of $70 as well as a special 3-year offer for D23 attendees last summer. Disney has projected to reach 60-90 million global subscribers by 2024, the same year it expects the service to be profitable. Wedbush analyst Daniel Ives previously told TheWrap he believes Disney+ needs 20 million subs in its first year to be on track.
Iger continued that both conversation from free to pay (Disney offered a 7-day free trial for Disney+) and churn rates were better than expected. Disney’s CFO Christine McCarthy said that they expect subscriber growth to come primarily from international customers over the next few months.
During the call, Disney announced the first Marvel Studios series “The Falcon and the Winter Soldier” will premiere in August, with “WandaVision” following in December. Additionally, “The Mandalorian” will return for Season 2 in October.
Disney media networks contributed $7.4 billion for the quarter, up 24% from a year ago. The parks, experiences and products division contributed $7.4 billion in revenue, up 8% from last year. Revenue for Disney’s direct-to-consumer and international divisions (those are reported together) jumped to $4 billion, compared with the $900 million generated in the year prior quarter. However, the segment’s operating loss jumped from $136 million to $693 million, primarily due to the consolidation of Hulu and costs associated with getting Disney+ off the ground.
Disney’s film studio brought in revenue of $3.8 billion, up 111% compared with last year, due to the inclusion of “Star Wars: The Rise of Skywalker,” which has grossed $1.06 billion so far. Disney did not have a “Star Wars” film in the year-ago quarter. Disney also had “Frozen II” this past quarter. A year ago, Disney only had “Ralph Breaks the Internet,” “Mary Poppins Returns” and “The Nutcracker and the Four Realms.”
Disney+ launched on Nov. 12. The company said more than 10 million people signed up on its first day through its free 7-day free trial. Verizon is also giving away one year of Disney+ to all new and existing unlimited wireless customers, new Fios Home Internet and new 5G Home Internet customers; about 20% of Disney+’s subscribers came from the Verizon deal.
Disney+ is available in the U.S., Canada, Netherlands, Australia and New Zealand. In March, Disney+ will be available in many European countries including the U.K., France, Germany, Italy and Spain.