In Thursday's premarket, Disney stock fell 5% as user growth at its streaming service Disney+ slowed more than expected, forcing the firm to fail both revenue and earnings projections for the fiscal fourth quarter.
During the pandemic, individuals stayed at home and binge-watched, setting a new high for streaming services. Although some cooling was expected when economies reopened, the decrease in streaming growth was nonetheless a shock.
During the quarter ending October 2, Disney+ added 2.1 million new subscribers, bringing the total number of subscribers to roughly 118 million, falling short of projections of over 124 million. The average monthly revenue per subscriber declined by 9% to $4.12 per month. Net subscriber increases at ESPN+ and Hulu, the company's other streaming services, also fell short of projections.
The delay is expected to be transitory, according to Walt Disney executives, who reiterated their aim of 260 million customers by 2024.
The world's largest entertainment firm spent extensively on content and promotions, resulting in a $630 million loss in the direct-to-consumer division, which also includes ESPN+ and Hulu. Higher costs of sports programming and marketing at ESPN+, as well as the delayed start of the Indian Premier League cricket tournament, all contributed to the losses, while the service did manage to increase its average revenue per subscriber. Hulu's ARPUs increased as well.
On revenue of about $19 billion, Disney posted fourth-quarter earnings of 37 cents per share.
Theme parks, which were particularly severely struck by the epidemic last year, rebounded to a $640 million profit.
Higher marketing costs and other expenses for key films like Scarlett Johansson's 'Black Widow' and 'Shang Chi' took a toll on the movie studio company, which lost $65 million over the period.