Walt Disney Co (DIS.N) overtook Netflix Inc (NFLX.O) with a total of 221 million streaming customers and announced it will raise prices for customers who want to watch commercial-free Disney+ or Hulu.
The media giant will raise the monthly cost of ad-free Disney+ by 38% to $10.99 in December when it begins offering a new option that includes ads for the current price.
Disney shares rose 6.9% in after-hours trading to $120.15 on Wednesday.
In 2017, Disney staked its future on building a streaming service to compete with Netflix as audiences shifted to online viewing from traditional cable TV and streaming.
Five years later, Disney overtook Netflix in total streaming customers. The Mouse House added 14.4 million Disney+ customers, surpassing the consensus of 10 million expected by analysts surveyed by FactSet, as it launched Marvel’s “Star Wars” “Obi-Wan Kenobi” and “Ms Marvel” series.
Along with Hulu and ESPN+, Disney said it had 221.1 million streaming subscribers at the end of the June quarter. Netflix said it had 220.7 million streaming subscribers.
“Disney is gaining market share when Netflix is struggling to add 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 help attract new customers, Disney will offer an ad-supported version starting Dec. 8 for $7.99 a month, 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 the plan.
The company lowered its long-term subscriber forecast for Disney+ customers on Wednesday, blaming the loss of cricket rights in India.
Disney now projects between 215 million and 245 million total Disney+ customers by the end of September 2024. That’s less than the 230 million to 260 million that Disney had forecast.
The adjustment was due to lower expectations for India, where the company is losing broadcast rights to Indian Premier League cricket matches.
For the first time, Disney separated estimates for Disney+ Hotstar customers in India from the rest of Disney+.
Chief Financial Officer Christine McCarthy said Disney expected to add up to 80 million Disney+ Hotstar customers by September 2024, and between 135 million and 165 million more.
The company still expects its TV broadcast unit 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 posted adjusted earnings per share of $1.09, up 36% from a year earlier, as visitors packed its theme parks. Analysts polled by Refinitiv had expected earnings of 96 cents.
Operating income more than doubled in the parks, experiences and products division to $3.6 billion.
The streaming losses hurt the media and entertainment unit, whose profits fell 32% to nearly $1.4 billion.
read also: Kajol will make her series debut in the Disney+ Hotstar project.
Overall revenue rose 26% from a year earlier to $21.5 billion, above the analyst consensus of $20.96 billion.
