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Much is made of streaming service subscriber number comparisons - especially between category leaders NETFLIX and DISNEY+. (I’m leaving out AMAZON PRIME and APPLE TV+ who consistently refuse to report any meaningful metrics).
DISNEY+ just hit the 103 Million global subscriber mark, now halfway to NETFLIX’s now 207 Million. DISNEY+ achieved this in about an 18 month timeframe, starting from scratch - a feat any other media company merging with or… now thought to be merging with another company would be ecstatic to hit.
However, diving into the less reported Revenue picture, DISNEY+ has a long way to go to catch NETFLIX’s current business. Remember it costs just as much for DISNEY+ to hire Jon Favreau as it would NETFLIX, and Profits & Loss/break even are the same inside the Magic Kingdom as they are outside of it.
All numbers below based on revenue from Jan 2021 thru March 2021 (Q1) reported in earnings reports.
DISNEY+ Q1 revenue was $1.24 Billion.
NETFLIX Q1 revenue was $7.16 Billion.
Or to put it another way - while DISNEY+ has 50% of NETFLIX’s subscriber count, it only has 17% of its revenue.
And even if DISNEY+ had the same subscriber count as NETFLIX… it would only have about 1/3 of its revenue with the current DIS+ pricing model.
WHY?
First and most obvious: it’s one thing to add subscribers for a product that costs $8/month, another when your main product offering is $14/month. Great growth… but a cheaper product. Then of course, there’s India.
A major industry analyst projects that almost half of the 70 Million DISNEY+ subscriber additions over the past 12 months were from India, where their monthly ARPU (Avg Revenue Per User) is far lower.
This caused total DISNEY+ ARPU to hit a new low in Q1: $3.99/month. NETFLIX gets over $14/month ARPU from North American subscribers, and it’s lowest global region still brings in about $9/month.
THE QUIET OLDER SIBLING: HULU
Looking at the bigger DISNEY TV revenue picture, it’s important to value something that’s not really discussed… HULU. DISNEY still makes more money from HULU than DISNEY+, despite DISNEY+ having 2.5X more subscribers.
Q1 Streaming revenue:
HULU : $1.37 Billion
DISNEY+ : $1.24 Billion
HULU LIVE TV cable bundle : $932 Million
ESPN+ : $376 Million
While total DISNEY STREAMING revenue growth was +59% vs one year ago, largely thanks to DISNEY+ growth, HULU as a total business makes almost 2X the amount of revenue for DISNEY. Also - HULU’s streaming service ARPU? $12.08, vs DISNEY+’s $3.99.
THE CORE TV BUSINESS
Looking at DISNEY’s traditional LINEAR NETWORKS revenue, it was -4% vs one year ago. Let’s face it: not shocking given cord cutting, network TV trends etc.
But, it’s important to keep perspective on it in terms of DISNEY’s larger TV revenue picture in 2021:
DIRECT TO CONSUMER / STREAMING total Global Q1 Revenue: $3.9 Billion, Loss: $290 Million
DISNEY LINEAR NETWORKS (ABC, ESPN, etc) Global Q1 Revenue : $6.7 Billion. Profit: $2.8 Billion
Obviously - Linear Network revenue is likely never to hit real growth again, with Streaming growing… and where the ad & subscription money is going here on out. But that $2.8 Billion profit tho 🙌.
PARTING THOUGHTS
While DISNEY+ can overcome these issues over time if they can keep the high paced growth going, I hope this gives you a scope of how much $$ DISNEY+ is actually contributing to overall video revenue here in 2021 and the growth it’ll need to find to get anywhere near NETFLIX. Despite Wall Street’s emphasis on DISNEY+ and the infinite buzz around the service, it has a ways to go.
It also puts a further spotlight on the ramifications if DISNEY+ growth starts to stall out as 2021 continues and the world re-opens: Basically - STREAMING revenue still has to increase approx 70% to replace the revenue from DISNEY’s long-existing Cable & Broadcast LINEAR TV business model.
Granted, DISNEY+ is still only in about 60 countries, compared to NETFLIX’s 190 so there is geographic white-space ahead. But DISNEY+ is already in a lot of the ones where they can charge the most for the service.
Just some things to keep in mind when you see subscriber counts reported and the hype around them: Follow the money, and all subscribers are not equal.
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