According to reports, strong user growth of Disney+ in the latest quarter helped Walt Disney Co.’s flagship streaming service close the gap with market leader Netflix, but industry watchers are focusing on streaming media Future prospects for services in a saturated market.
Disney+ added a strong 11.8 million subscribers in the fiscal first quarter, fueled by hits like “The Mandalorian” and Black Widow. But there is a big reason behind the dazzling data, which is “bundling” — Disney bundles Disney+ and ESPN+ with the Hulu Live service.
Michael Nathanson, an analyst at investment bank Moffett Nathanson, emphasized that 2 million subscriptions are the result of automatic bundling with Hulu Live. There are another 2.6 million subscriptions from Disney+ Hotstar, which generate roughly $1 per user per month.
Disney reiterated its long-term goals and forecast stronger growth in the second half of the year than in the first half. That’s in stark contrast to Netflix’s bleak outlook last month.
“Disney may have room to grow in streaming subscriptions, but it will reach a saturation point one day,” said Russ Mould, investment director at investment platform and economic services provider AJ Bell.
As of the end of 2021, the total number of Disney+ subscribers is 129.8 million, while the total number of paid members of Netflix is about 222 million. It can be seen that Disney still has a certain gap with Netflix in terms of the total number of users.
On a post-earnings conference call, Disney executives emphasized the importance of local content in markets everywhere as the U.S. market is saturated. The company recently tapped Rebecca Campbell to take on international content.
Netflix has managed to counter the lack of traditional blockbusters by relying on locally-produced content, attracting millions of international subscribers with shows such as “Squid Game”, “Cash House” and the French-language series “Luoping.”
About a third of the $33 billion in total spending went to sports programming, Disney CFO Christine McCarthy said.
“With Disney+ launching in 42 countries in the summer of 2022, its international growth will likely be more important than the U.S.,” said Joe McCormack, senior analyst at management consultancy Third Bridge.