Walt Disney Co’s streaming growth fell short of Wall Street estimates on Thursday after seeing strong consumer demand early in the pandemic, while the company’s quarterly profit topped forecasts.
Shares of Disney fell 3.7% in after-hours trading.
CEO Robert Chapek said that movie and television shows were resuming normal production and new offerings would help spur subscriber growth across Disney+, ESPN+, Hulu and Hotstar.
Adjusted earnings-per-share came in at 79 cents for January through April 3, Disney said. Analysts had expected 27 cents, according to IBES data from Refinitiv.
Disney is focusing on quickly building its streaming service to challenge Netflix Inc as audiences move away from cable TV. The company’s popular theme parks remain in recovery mode with attendance limits due to the COVID-19 pandemic.
“(Disney+) growth is significantly decelerating as the initial pandemic boost has waned,” eMarketer analyst Eric Haggstrom said. “Given Disney’s content investments, subscriber growth should return strongly once this short-term turbulence ends.”
Disney+ reached a total of 103.6 million customers as of early April, the company said. Two Marvel superhero series, “WandaVision” and “The Falcon and the Winter Soldier,” debuted during the quarter. Analysts had projected 109.3 million, according to FactSet.
The average monthly revenue per paid subscriber for Disney+ decreased from $5.63 to $3.99, the company said, due to the launch of Disney+ Hotstar in overseas markets. Factset estimates showed Wall Street was expecting average revenue of $4.10 per user.
Disney plans to launch Disney+ in Malaysia on June 1 and in Thailand on June 30, executives said on a call with investors.
Overall revenue fell 13% to $15.61 billion in the second quarter ended April 3, compared with analysts’ estimate of $15.87 billion, according Refinitiv.
Net income from continuing operations rose to $912 million, or 50 cents per share, in the second quarter from $468 million, or 26 cents per share, from a year earlier.
Operating income at Disney’s media division rose 74% from a year earlier to $2.9 billion as profit rose at domestic and international TV networks. The streaming media unit lost $290 million, far below the $673 million that Wall Street expected.
The theme parks division posted an operating loss of $406 million. The Disneylands in California and Paris were closed for the full quarter. Disneyland in California reopened April 30.
Disney reached a renewal deal through 2028 with Major League Baseball with 30 exclusive regular season games. The deal includes an option to simulcast all live MLB coverage for ESPN networks on ESPN+.
Reporting by Lisa Richwine in Los Angeles; Eva Mathews and Tiyashi Datta in Bengaluru; Editing by Sriraj Kalluvila and Lisa Shumaker; Reuters