Disney tops Netflix on streaming subscribers, sets higher prices

Walt Disney Co DIS-N overtook Netflix Inc. NFLX-Q with 221 million total streaming customers and announced it will increase prices for customers who want to watch Disney+ or Hulu without ads.

The media giant will increase the monthly cost of Disney+ ad-free by 38% to $10.99 in December when it begins offering a new option that includes ads at the current price.

Disney shares rose 6.9% in after-hours trading on Wednesday to $120.15.

In 2017, Disney staked its future on building a streaming service that could compete with Netflix as audiences transitioned from traditional cable and broadcast television to online television.

Five years later, Disney has overtaken Netflix for the total number of streaming customers. The Mouse House added 14.4 million Disney+ customers, beating the consensus of 10 million expected by analysts polled by FactSet when it launched the Star Wars series Obi-Wan Kenobi and Marvels “Ms. Wonder.”

Along with Hulu and ESPN+, Disney reported it had 221.1 million streaming subscribers at the end of the June quarter. Netflix said it has 220.7 million streaming subscribers.

“Disney is gaining market share while Netflix struggles to gain more subscribers,” said Haris Anwar, an analyst at Investing.com. “Disney has even more room to grow in international markets, where it is rapidly rolling out its service and adding new customers.”

To attract new customers, Disney will offer an ad-supported version for $7.99 per month starting Dec. 8, the same price it now charges for the ad-free version, the company said.

Hulu prices will increase by $1 to $2 per month in December, depending on your plan.

The company lowered its long-term subscriber forecast for Disney+ customers on Wednesday, blaming the loss of cricket rights in India.

Disney now forecasts between 215 million and 245 million total Disney+ customers by the end of September 2024. That’s down from the 230 million to 260 million that Disney had forecast.

The adjustment stemmed from reduced expectations for India, where the company is losing streaming rights to Indian Premier League cricket matches.

For the first time, Disney has released estimates for Disney+ Hotstar customers in India versus the rest of Disney+.

Chief Financial Officer Christine McCarthy said Disney expects up to 80 million Disney+ Hotstar customers by September 2024, and between 135 million and 165 million more.

The company still expects its streaming TV division to turn a profit in fiscal 2024, McCarthy said. In the most recent quarter, the division lost $1.1 billion.

For the fiscal third quarter ended July 2, Disney reported adjusted earnings per share of $1.09, up 36% year over year as visitors packed its theme parks. Analysts polled by Refinitiv had expected earnings of 96 cents.

Parks, Experiences and Products operating income more than doubled to $3.6 billion.

Streaming losses weighed on the media and entertainment unit, whose earnings fell 32% to nearly $1.4 billion.

Total revenue rose 26% year over year to $21.5 billion, beating analyst consensus of $20.96 billion.