CFO McCarthy: Disney Bullish on SVOD Despite Headwinds

When Disney announced that its branded SVOD platform Disney+ had topped 103 million subscribers through the second fiscal quarter ended April 3, the tally fell below company and Wall Street projections of 108 million to 110 million, respectively.

Speaking on the May 13 fiscal call, CFO Christine McCarthy put a positive spin on the setback, saying Disney+ added subs at a faster pace in the last month of the second quarter than it did in the first two months.

“And that was despite no major market launches, a price increase in [Europe and the Middle East] and a domestic price increase towards the end of the quarter,” McCarthy said.

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She said Disney’s combined direct-to-consumer portfolio of Disney+, Hulu, Hulu with Live TV, ESPN+, Disney+ Hotstar and pending general entertainment site Star+, remains on track to achieve company guidance of 230 million to 260 million subscribers by the end of fiscal 2024.

That said, Disney is facing increased OTT headwinds going forward, including the fact that its market-leading online TV service, Hulu with Live TV, lost 200,000 subs in the quarter — a decline McCarthy attributed to seasonality of content and a $10 monthly price hike.

While Disney+ has added 30 million subs in the first half of the fiscal year, sub growth is expected to cool in the second half, due in part to ongoing COVID-19 issues in India — which accounts for a third of all Disney+ subscribers. The platform has exclusive streaming rights to Indian Premier League cricket, a sport now sidelined in the world’s second most-populous country due to the pandemic.

McCarthy said about half of the 60 IPL matches that were expected to be played this season have already taken place. The remaining 30 matches on schedule have been canceled, but negotiations are underway to relocate the fields of play outside India.

“If they were able to successfully relocate the tournament, we would hopefully see an impact, especially on advertising,” McCarthy said. “It would be better than if there were no rescheduled matches. So let’s hope they are able to relocate [the tournament].”

In addition, Disney pushed back to Aug. 31  the launch of the Star+ Latin America launch. At the same time, rollouts of Disney+ in Malaysia and Thailand remain on track for June 1 and June 30, respectively. The company expects the pending launch of “Loki” on June 9, starring Tom Hiddleston, to be a strong streaming driver.

“We remain very optimistic about our [streaming] future,” McCarthy said.

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