- The service ended the second quarter of the year with 157.8 million subscribers
- Wall Street was spooked by the decline in users, which went against predictions
- It comes as the company’s war with Florida governor Ron DeSantis rages on
By TILLY ARMSTRONG FOR DAILYMAIL.COM
PUBLISHED: 15:59 EDT, 11 May 2023 | UPDATED: 15:59 EDT, 11 May 2023.
Disney shares fell almost 9 percent Thursday after the company reported losing four million subscribers to its Disney+ streaming service.
Shares at the entertainment giant fell to around $92 – a drop that was set to erase around $15 billion from the entertainment giant’s market value.
The share price tumble comes despite Disney posting profit and revenue for the second quarter in line with Wall Street predictions.
However investors were spooked by the huge loss of subscribers from Disney+, which showed the streaming segment is still a long way from achieving profitability.
The service ended the quarter with 157.8 million subscribers, down from 161.8 million in December 2022.
- Disney+ ended the quarter with 157.8 million subscribers, despite predictions it would grow.
This is despite predictions it would steadily grow to over 163 million.
The service lost about 300,000 subscribers in the US and Canada, while its global user count was particularly impacted by cancellations in India.
According to the Wall Street Journal, this was partly due to the site losing the rights to stream the Indian Premier League cricket.
The downtick was offset by reduced spending on marketing and recent price increases at Disney+, which saw its ad-free ‘premium’ offering soar to $10.99 a month, and a ‘basic’ offering with adverts introduced for $7.99 a month.
All major streaming services are under increasing pressure to keep customers as the cost of living crisis hits and the pandemic boom fades.
Disney+ is also facing competition from Netflix, which has launched an ad-supported tier.
Disney Chief Executive Robert Iger said the company was happy that the recent price increase for the non-ad supported version of Disney+ was ‘de minimis,’ the outlet reported.
‘That leads us to believe that we, in fact, have pricing elasticity,’ he allegedly said on a call with analysts on Wednesday.
Iger also reportedly said Disney would make Hulu content available within Disney+ in the U.S. by the end of the year, though the streaming platforms including ESPN+ would remain on offer as stand-alone options.
However Paul Verna, principal analyst at research firm Insider Intelligence, told CNBC that Disney+ was still facing headwinds from reductions in ad budget, intense competition in the market and continued economic uncertainty.
He said: ‘While Disney managed to stem its streaming revenue losses, it did so mainly by raising prices, and that strategy is not sustainable in the long term.
‘Disney plans another price hike later this year, but it will soon run out of headroom for further increases.’
It comes as Iger struck a new tone in the company’s ongoing war with Florida governor Ron DeSantis.
The Disney boss warned that the Republican governor’s attacks could put his plans for a $17 billion in investment and the creation of 13,000 new jobs at Disney World in jeopardy.
Iger, on a call with the company’s shareholders on Wednesday, did not mention DeSantis by name or say flat out that Disney is reconsidering the investment.
Iger said Florida is acting unfairly and asked the shareholders: ‘Does the state want us to invest more, employ more people and pay more taxes or not?’
He said he’s ‘closely evaluating where it makes sense to direct future investments’ in Disney’s theme parks.
‘We certainly never expected to be in the position of defending our business interests in federal court considering the relationship we’ve had with the state for 50 years,’ Iger said.
DeSantis has not yet responded to Iger’s latest comments in the feud, which has seen both sides attempt to one up the other.
Disney sued Florida and the state countersued. Both have made threats, including ones from DeSantis that include increasing hotel taxes and road tolls and building a prison on ground the state owns near the Disney theme park.
The governor’s battles against Disney have elevated his national profile ahead of speculation he will announce a presidential bid this spring.