Disney+ Adds 7.9 Million Q2 Subs, Reaches 138 Million Globally

The Walt Disney Co. May 11 said it added 7.9 million Disney+ subscribers in the second quarter (ended April 2). The streamer ended the period with almost 138 million subscribers worldwide, which includes 50.1 Hotstar subscribers in India.

The streamer, combined with ESPN+ and Hulu and Hulu + Live TV, brings Disney’s direct-to-consumer bundle to almost 206 million subs, up from 196.4 million during the previous-year period.

Specifically, Disney+ added 7.1 million North American subs, to bring the region’s total to 44.4 million, up from 37.3 million in the previous-year period. Internationally (excluding Hotstar), Disney+ added 12.1 million subs to bring its overseas base to 43.2 million, compared with 31.1 million a year ago.

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ESPN+ added 9 million subs to reach 22.8 million, up from 13.8 million last year. Hulu ended the quarter with 41.4 million subs, up from 32.8 million subs in the prior-year period. Hulu + Live TV, Disney’s online TV streaming platform, finished the quarter with 4.1 subs, up from 3.8 million subs last year.

“Our strong results in the second quarter … once again proved that we are in a league of our own,” CEO Bob Chapek said in a statement. “Quite simply, we believe Disney+ is one-of-a-kind streaming service.”

At the same time, direct-to-consumer business increases also result in increased costs. Segment revenue for the quarter increased 23% to $4.9 billion, and operating loss increased $600 million to $900 million. The increase in operating loss was due to higher losses at Disney+ and ESPN+ and lower operating income at Hulu.

Lower results at Disney+ reflected higher programming and production, marketing and technology costs, partially offset by an increase in subscription revenue. Higher subscription revenue was due to subscriber growth and increases in retail pricing. The increases in costs and subscribers reflected growth in existing markets and, to a lesser extent, expansion to new markets.

Lower results at ESPN+ were due to higher sports programming costs and a decrease in income from Ultimate Fighting Championship (UFC) pay-per-view events, partially offset by an increase in subscription revenue due to subscriber growth. Lower UFC pay-per-view income was due to a decrease in average buys per event.

The decrease at Hulu was due to higher programming and production, marketing and technology costs, partially offset by subscription revenue growth and higher advertising revenue. The increase in programming and production costs was primarily due to higher subscriber-based fees for programming the live-TV service due to the carriage of more networks, an increase in the number of subscribers and rate increases. Subscription revenue growth was due to an increase in subscribers and higher average rates, primarily due to increases in retail pricing. The increase in advertising revenue was due to higher rates and impressions.

Streamers Up Their Live Sports Game

Amazon and Apple TV+ are reportedly increasing their professional sports leagues aspirations, with Apple in talks to live-stream select Major League Baseball games this year. While details remain scarce, the agreement would include a smattering of non-weekend games, allowing Apple to test the waters as it attempts to jumpstart subscriber interest beyond original TV series and movies.

With live professional sports slowly embracing distribution beyond proprietary walled platforms, U.S. streamers (with the exception of Netflix) are expanding their sports dreams. None have done so more dynamically than Amazon, which last year secured exclusive rights to “NFL Thursday Night” games over the next 12 years for $1 billion annually.

Prime Video is now in discussions with venerable NFL broadcast play caller Al Michaels to host the streamer’s revamped Thursday games for the 2022 season. The streamer most recently relied on the first-ever female broadcast team (Hannah Storm and Andrea Kremer) and/or the Fox Sports simulcast duo of Joe Buck and Troy Aikman. Aikman reportedly is eyeing the Amazon gig.

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The streamer is also considering hiring former Seattle Seahawks running back Marshawn Lynch as a sideline reporter/analyst.

With sports a longtime staple of CBS, ABC, NBC, ESPN and TNT networks, streaming availability of football and basketball on the Paramount+, Peacock and HBO Max platforms is a natural extension. Peacock just announced it would live-stream all events, including opening and closing ceremonies, at the upcoming Winter Olympics in Beijing. Paramount+ is also aggressively streaming European soccer.

“[Sports] is television’s most valuable property by far, attracting massive audiences, and major advertisers, and it will be fundamental to the growth of Paramount+,” George Cheeks, head of the CBS Entertainment Group, said in a presentation last year. “It drives more subscriptions than any other program and significant engagement too.”

Paramount+ is the exclusive U.S. streaming hub for European soccer, such as the UEFA league, including the Champions League, Europa League and Europa Conference League matches.

WarnerMedia-owned Turner Sports’ recent seven-year deal with the National Hockey League for TNT and TBS, also means HBO Max will get its share of live-streams. The streamer heretofore has largely opted for sports-themed documentaries and series, “Real Sports with Bryant Gumbel.”

Turner Sports is sharing the hockey rights with The Walt Disney Co. and ESPN+ as the NHL’s national media rights partners in the United States.

“We love the reach of their linear networks, both TNT and TBS, and as we look to the future, we’re excited about the digital properties, in particular HBO Max and Bleacher Report,” said NHL Commissioner Gary Bettman. “For us, this is a perfect fit.”

Netflix Leads Parks List of 2021 Top 10 U.S. SVOD Services

Netflix topped the list of Parks Associates’ 2021 top 10 U.S. paid subscription over-the-top (OTT) video services.

The list is based on estimated numbers of subscribers through September 2021 from the firm’s OTT Video Market Tracker.

The 2021 list shows the first change in the top three services since the firm started tracking the providers in 2015. Disney+ has moved into the top three, moving ahead of Hulu in number of subscribers. HBO Max moved into the top five, while Paramount+ (rebranded from CBS All Access) jumped to number seven on the list. New entrant Discovery+ is right behind at 11.

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Parks Associates’ 2021 Top 10 U.S. Subscription OTT Video Services (SVOD):

  1. Netflix
  2. Prime Video
  3. Disney+
  4. Hulu
  5. HBO Max
  6. ESPN+
  7. Paramount+
  8. Apple TV+
  9. Starz
  10. Showtime 

 

The research firm reports that, based on quarterly surveys of 10,000 U.S. broadband households, more than 80% of broadband households have at least one OTT service and that the churn rate for OTT services is 44%, with consumers adopting multiple subscriptions and experimenting with different services.

“While the Disney+ content portfolio may have allowed it to leapfrog stablemate Hulu in 2021 rankings, its position reaffirms the collective power of the Disney Bundle triumvirate: Hulu, Disney+ and ESPN+,” Paul Erickson, director of research of Parks Associates, said in a statement. “ViacomCBS’s successful rebrand and content-fueled reformulation of CBS All Access into Paramount+ have allowed it to leapfrog Apple TV+ into seventh place behind ESPN+, and time will tell if the service will break into the top five.”

“Broadband providers added an estimated 6.4 million residential customers to date in 2021, showing rapid growth,” Kristen Hanich, director of research at Parks Associates, said in a statement. “The importance of bundling pay-TV with home broadband is diminishing though — our Home Services Dashboard finds that only 38% of U.S. broadband households bundle pay-TV with their home internet service, a significant decline from past levels.”

The role of online TV continues to grow, with consumers embracing OTT services offered by familiar providers, according to Parks.

“In Q3 2021, 19% of U.S. broadband households reported subscribing to a vMVPD service, nearly double from the previous year,” Eric Sorensen, contributing senior analyst at Parks Associates, said in a statement. “By 2024, the U.S. vMVPD subscriber base will increase to more than 23 million households. All players will continue vying for the leading positions.” 

Disney Pushes ‘Shang-Chi’ DVD, Blu-ray Disc on ESPN

With Marvel Studios’ Shang-Chi and the Legend of the Ten Rings set to lead the 2021 domestic box office with more than $224 million in revenue, Disney is pushing marketing efforts to sell the movie at retail — including packaged media.

Ads for the DVD, Blu-ray Disc (and digital) release of the movie, which streeted on disc Nov. 30, have featured prominently on Disney-owned sports network ESPN, including regular spots on “SportsCenter” and the Sunday night (Dec. 5) “SportsCenter With Scott Van Pelt.”

Scott Van Pelt

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The aggressive marketing comes after Disney disclosed that home entertainment retail sales of its movies and TV shows fell 44% in the fiscal year ended Oct. 2. The company cited just three prominent releases in the year: Mulan, Raya and the Last Dragon and Black Widow, whereas the prior fiscal year included Frozen II, Star Wars: The Rise of Skywalker, The Lion King, Toy Story 4, Maleficent: Mistress of Evil, Onward, Ford v Ferrari, Aladdin and Avengers: Endgame.

Significantly, the 2021 fiscal results included the impact of Premier Access, Disney’s premium video-on-demand platform affording Disney+ subscribers early access to Widow, Cruella, Jungle Cruise and Raya and the Last Dragon. Disney PVOD revenue jumped 70% in the fiscal year.

Shang-Chi, however, was not made available on Premier Access. As a result, Disney is hoping the “non-Access” of the title morphs into a coveted gift entering the winter holiday retail season. As previously reported, Best Buy and Target bowed exclusive 4K Ultra HD Blu-ray editions of the movie.

Ampere: Disney+, ESPN+, Hulu Top 100 Million Combined U.S. SVOD Subscribers

Disney topped 100 million U.S. subscribers to its streaming services for the first time in early Q4 2021, according to new data from Ampere Analysis. By the end of this quarter (ending Dec. 31), the “Disney bundle,” i.e., Disney+, Hulu and ESPN+, will further boost customer numbers.

Disney ended the third quarter with 179 million SVOD subs globally.

Disney topped 50 million U.S. subs in Q4 2019 following the launch of Disney+, and two years later hit 100 million, with both Hulu and Disney+ on track to finish the year in excess of 40 million subs.

ESPN+ is expected to finish 2021 with more than 20 million subs, nearly six times more than at the end of Q3 2019, before the launch of Disney+. Ampere estimates that the domestic client base of the three services will reach around 108 million subs by the end of the year, up from around 99 million at the end of Q3 2021.

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“A strong content portfolio from Disney+ and Hulu, making the most of its key Marvel and Star Wars franchises (on Disney+) and FX (on Hulu), as well as the continuation of live sports (on ESPN+) has further driven subscription growth this year,” Toby Holleran, research manager at Ampere, said in a statement.

Holleran said the strategy to incorporate Disney+ and ESPN+ subs — alongside Hulu — with Hulu online TV will further push the domestic sub base to around 108 million by the end of the year.

With media reports suggesting NBCUniversal is considering moving its content from Hulu to the Peacock streaming service in 2022, Holleran said Disney could still grow subs.

“The combination of attractive bundled pricing, alongside a strong slate of original content scheduled for release in 2022 across Disney+ and Hulu, [we] expect the combined suite to experience growth beyond 2021,” he said.

Disney Premier Access/PPV Revenue Jumped 70% to $933 Million in 2021

Disney made headlines when it generated $60 million in high-margin premium video-on-demand (or Disney+ Premier Access) revenue for the opening weekend box office release of Marvel Studios’ Black Widow.

Disney didn’t disclose further PVOD revenue until the Nov. 24 release of the media giant’s annual 10-K report. In the filing, Disney said it generated $933 million in revenue from the combined PVOD sales of Widow, Cruella, Jungle Cruise and Raya and the Last Dragon, in addition to 13 UFC pay-per-view bouts on ESPN+.

That was 70% higher revenue than the $550 million generated from the Premier Access debut of Mulan and 11 PPV UFC fights in the prior fiscal year.

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While Premier Access delivers Disney higher margins than other distribution channels, including theatrical, critics contend that PVOD undermines the movie’s theatrical potential — a mindset that led Black Widow star Scarlett Johansson to file a lawsuit against Disney alleging PVOD undermined her contractually mandated compensation. Johansson and Disney settled their disagreement out of court.

Disney CEO Bob Chapek said the studio would continue to explore concurrent theatrical/Premier Access releases in 2022, in addition to releasing movies in different channels depending on the movie and market conditions.

“We will always do what we believe is in the best interest of the film and the best interests of our constituents,” Chapek told investors in August.

Meanwhile, the motto “Go big or go home” appears to be Disney’s outlook for fiscal-year 2022 as it seeks to significantly ramp up spending on original content, sports rights and capital expenditures.

In line with the company putting most of its eggs into its direct-to-consumer businesses (i.e., Disney+, ESPN+, Hulu, Hulu + Live TV), Disney said it expects to spend upwards of $33 billion on original content, productions and live sports rights — up about 25%, or $8 billion from FY 2021.

In the report, Disney said the increased expenditures would be driven by higher spend to support “our DTC expansion” and “generally assumes no significant disruptions to production due to COVID-19.”

Disney will again dominate the 2021 domestic box office with five of the top 12 movies in ticket sales thus far, led by Shang-Chi and the Legend of the Ten Rings with $224 million. The Thanksgiving weekend release of animated movie Encanto is expected to add to the studio’s haul.

The top-grossing global theatrical release in 2021 remains China’s The Battle at Lake Changjin, the nationalist war drama that has generated an impressive $888 million at the largely Asian box office.

Disney Ups Hulu Online TV Price, Adds Free SVOD Options

Disney has sent emails to Hulu + Live TV subscribers informing them about a $5 monthly hike to their online TV service subscription. The price hikes, which go into effect Dec. 21, raise the ad-supported option to $70 from $65, while the ad-free tier increases to $76 from $71 monthly.

Key to the price hikes: Subscribers get free access to Disney+ and ESPN+, which along with the Hulu SVOD platform, make up Disney’s direct-to-consumer business across 179 million combined subscribers.

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Hulu+ ended the most recent fiscal period (Oct. 2) with 4 million subscribers, which was down from 4.1 million subs during the previous-year period. The online TV platform still tops a market that includes YouTube TV, Philo, Sling TV, Fubo TV and AT&T TV, among others.

The price hikes following last month’s $1 Hulu SVOD fee surcharge, which now costs $7 with ads and $13 without advertising.

Streaming Video Betting Big on Legalized Sports Gambling

Live sports and gambling have a long co-dependent relationship, which is expanding beyond casinos to over-the-top video. The new field of dreams for incremental billions in revenue began in 2018 after the U.S. Supreme Court struck down the federal anti-sports-gambling law. Wagering on pro and college sports became legal in September 2019 with both mobile and in-person betting permitted.

Online video platform FuboTV’s pending gaming unit just launched marketing partnerships with the NFL’s New York Jets and NBA’s Cleveland Cavaliers — a first for an OTT platform.

“Everybody does the NFL draft. Everyone’s got a mock draft. Well, seemingly every content area has their betting expert. So, I think the key is gamification of it,” Aaron Nagler, co-founder of Cheesehead TV, told a Streaming Media panel this summer. “It’s just extending what your visit to Vegas might be to an online experience wrapped inside whatever specific content you’re creating.”

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Fox Sports became the first major media company in the U.S. to acquire a stake in sports gambling after paying $236 million for a 5% ownership of The Stars Group.

“Digital sports wagering represents a growing market opportunity that allows us to diversify our revenue streams, connect directly with consumers and expand the reach of the Fox Sports brand,” said Eric Shanks, CEO of Fox Sports.

Fox Bet Super 6 just added nearly 3 million players during the 2020 NFL season, bringing its user base to more than 4.3 million players. It claims to be the biggest free-to-play online game of its kind in the country. The platform is rolling out in states that have legalized wagering, including most recently Michigan on Jan. 26. Fox also owns a 18.5% stake in FanDuel, the daily fantasy and online sports book.

“A key differentiator for Fox Bet has been across promotional power of all of Fox’s assets (including ad-supported streaming site Tubi) to ignite the Fox Bet brand,” Fox Corp. CEO Lachlan Murdoch said on an investor call earlier this year. The executive said sports gambling factors into ongoing distribution of NFL games.

“The NFL is very aware of the importance of sports wagering,” Murdoch said.

FanDuel in 2019 inked a deal with FuboTV, making it the exclusive sports book, online casino, horse racing and DFS (distributed file system) partner of the TV streaming service. The agreement was FanDuel Group’s first partnership with an online TV service aimed at expanding FuboTV’s sports offering for consumers while integrating betting data on the platform.

“We are always looking for ways to add value for consumers and enhance their premium experience with FuboTV,” said Min Kim, VP of business development at Fubo. “Gaming and sports are natural complements.”

Adam Kaplan, VP of content business and operations at FanDuel, said the company’s data analytics will change how people watch live sports on TV and the Internet.

“We can enhance the live-viewing experience by allowing cord-cutting sports fans to view the content that matters to them the most from their TV, phone, tablet or computer,” Kaplan said.

But FanDuel’s relationship with FuboTV could change as the latter branches out into its own sports gambling. The 6-year-old service last year acquired Balto Sports, a backend developer of fantasy sports gaming software, and Vigtory, an interactive sports gaming company, for its Fubo Gambling unit launching in the fourth quarter.

“The valuations around sports betting operators are so huge, why not take a punt on being one?” Andy Clerkson, a partner at Red Knot Communications, a gambling PR firm, told LegalSportsReport.com. “You could be a super-affiliate worth hundreds of millions. Or you could try and be an operator worth billions.”

The Motley Fool’s Rick Munarriz contends FuboTV can open the “spigot of sports gambling” without raising eyebrows the way Google or Disney might with regulators.

“FuboTV can go places where others can’t,” Munarriz wrote.

Disney-owned ESPN has partnerships with Caesars Entertainment, offering sport-betting-related content on ESPN and ESPN+, the brand’s SVOD platform.

“The sports betting landscape has changed, and fans are coming to us for this kind of information more than ever before,” said Mike Morrison, VP of business development at ESPN. “We are poised to expand our coverage in a big way.”

WarnerMedia Entertainment inked a deal with Caesars Entertainment to build a branded Vegas studio for its online Bleacher Report (B/R) platform.

Disney, which has sought to downplay tacit support for gambling, is changing its tune. ESPN recently launched “The Daily Wager” and “ESPN Bet.” In September, CEO Bob Chapek said the company would get more aggressive with sports wagering, including licensing the ESPN brand name to a third-party sports book for the right price.

“Let’s just say our fans are really interested in sports betting,” Chapek said at the virtual Goldman Sachs Communacopia Conference event. “Let’s say our partners in the leagues are interested in sports betting, so we’re interested in sports betting. Strategically, sports betting gives us the ability to appeal to a much younger sports fan who has a very strong affinity for those sports. So it’s definitely a place we want to be.”

Disney Launches Star+ Streaming Service in Latin America

Disney Aug. 31 announced it has launched its new general entertainment and sports streaming service Star+ in Latin America. The service includes local fiction and non-fiction content, in addition to live sports from ESPN, content from 20th Century Television and 20th Century Studios.

Star+ is available as standalone $10.49 monthly service ($105 annually), or as part of Combo+, a bundled offering with access to Disney+ for $13.99 monthly.

Subscribers can stream the platform on a wide selection of supported mobile and connected TV devices, up to four devices at the same time, up to 25 on-demand downloads across 10 devices, customized recommendations, the ability to set up seven different profiles, and parental controls.

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“Star+ confirms our commitment to generate relevant and varied offerings by providing our audiences with access to fully personalized content tailored to their tastes,” Diego Lerner, president of The Walt Disney Company Latin America, said in a statement.

Unique to Star+ is original content created in and for Latin America. The regionally produced originals begin streaming Aug. 31 and address themes related to Latin American popular culture in both fiction and non-fiction formats begin streaming Aug. 31.

Titles include “Santa Evita,” “No Fue Mi Culpa,” and a new season of “Impuros”; comedy, with series such as “El galán.” “La TV cambió,” “él no” and “Los protectores”; dramedy, with productions such as “Terapia alternativa” and “El encargado”; thrillers “Insania” and “Horario estelar”; biopics “Ringo and Pancho Villa.” “El centauro del norte”; and docu-style reality shows, with productions such as the new season of the renowned documentary series “Bios,” “Vidas que cambiaron la tuya.”

Star+ ushers Latin America streaming access to ESPN featuring a collection of live shows and events from European soccer leagues; UEFA Champions League, UEFA Europa League, UEFA Conference League, Spain’s LaLiga and Copa del Rey, England’s Premier League and FA Cup, Italy’s Serie A and Coppa, Portugal’s Liga Portugal Bwin, Germany’s Bundesliga and DFB Pokal cup, and The Netherlands’ Eredivisie.

The platform will also feature some of America’s top soccer competitions like CONMEBOL Libertadores, Copa do Nordeste, CONCACAF League, Copa de Oro CONCACAF, CONCACAF Champions League, CONCACAF Qualifiers Qatar 2022, Liga MX, Liga MX Femenil, BBVA Expansión MX league, Argentina’s LPF, and MLS.

The sports offering also includes the tennis Grand Slam (Australian Open, Roland Garros, Wimbledon, US Open), as well as the ATP, WTA, and Abierto Mexicano tournaments; rugby with Los Pumas, URBA, Sanzaar, Seis Naciones, SLAR, and The Rugby Championship; NBA and NCAA basketball; motorsports with Formula 1 and MotoGP; boxing, UFC, and Bellator MMA; golf competitions like the PGA Tour, The Masters, The Open, PGA Championship, and Ryder Cup; cycling competition Tour de France; NFL football and NFL Red Zone; extreme sports with X Games; surfing from the WSL; LMB and MLB baseball; and hockey from the NHL.

In turn, Star+ will feature local versions of ESPN staples such as SportsCenter, as well as original productions created in Latin America, such as ESPN Knockout, and ESPN Equipo F, among others.

The platform also includes new Star+ exclusive international original productions, with star-studded casts and renowned figures behind the scenes. Some of the much-anticipated titles include comedy thriller “Only Murders in the Building,” starring Steve Martin, Martin Short, and Selena Gómez; “Love, Victor,” “Big Sky” and “A Teacher.” Original series that are global hits are also available, such as all seasons of “This Is Us” and “The Walking Dead,” including the double-episode finale that premieres today. Biographical drama “Pam & Tommy,” starring Lily James and Sebastian Stan, and “Y: The Last Man,” the new FX drama series based on the graphic novel by Brian K. Vaughan and Pia Guerra will also be included in the platform at a later time.

Finally, Star+ includes all 20th Century Television productions, such as award-winning series “The Simpsons,” with all seasons available in one single platform for the first time. Fans can also watch titles such as “Family Guy,” “Futurama,” “Bob’s Burgers,” and Solar Opposites premiering in late September.

Disney+ Ends Q3 With 116 Million Subscribers; Launching ‘Disney+ Day’ on Nov. 11

The Walt Disney Co. Aug. 12 reported that its branded Disney+ subscription streaming VOD service ended the third quarter (ended July 3) with 116 million subscribers — up from 57.5 million subs in the previous-year period.

Disney CEO Bob Chapek attributed the subscriber growth to launches of Pixar Animation’s Luca, and original series “Loki” and “The Falcon and the Winter Soldier,” among other programming, in core Disney+ markets.

When combined with ESPN+, Hulu and Hulu+Live TV, Disney ended the period with almost 174 million subs. Specifically, ESPN+ finished the quarter with 14.9 million subs, up from 8.5 million last year. Hulu increased its sub base to 39.1 million from 32.1 million. Online TV platform Hulu with Live TV topped 3.7 million subs from 3.4 million last year.

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“We ended the third quarter in a strong position, and are pleased with the company’s trajectory as we grow our businesses amidst the ongoing challenges of the pandemic,” Chapek said in a statement.

Disney on Nov. 11 will bow “Disney+ Day” to celebrate the two-year anniversary launch of the SVOD platform. The event will coincide with new product announcements and a company-wide cross-promotional campaign.

Disney is launching Disney+ Hotstar in Malaysia and Thailand in this quarter. The platform is currently operating in limited capacity in Japan and will switch to full operation in late October. Other launches in South Korea, Taiwan and Hong Kong.

As previously disclosed, the launch of Disney+ in Eastern Europe has been delayed to the summer of 2022 primarily to allow for an extended footprint, that includes parts of the Middle East and South Africa.

“We’re excited about the launch of Star+ [featuring more adult-themed FX content] in Latin America later this month,” Chapek said. “The direct-to-consumer business remains our top priority.”