In what could be seen as a reflection of just how unexpectedly well the direct-to-consumer service has performance since launch, analysts are describing as slightly ‘disappointing’ the news that Disney+ has ‘only’ added 8.7 million customers over the course of the second quarter of the current financial year.
For the quarter ended 3 April 2021, Disney+ owner The Walt Disney company posted second quarter half-yearly revenues of $15.6 billion, down 13% compared with the end of Q2 2020. Revenues for the six-month period were $31.862 billion, tumbling 18% annually. Net income for the quarter though almost doubled over the course of the year to $912 million. This formed virtually all of the half yearly total of $941 million down 64%.
Offering mitigation for the results, the Walt Disney company noted it that it was still meeting headwinds from the Covid-19 pandemic which while affecting the parks, experiences and products segments most significantly, also continued to cause disruptions in the production and availability of content, including the cancellation or shift of key live sports programming from fiscal 2020 into the first quarter of fiscal 2021, as well as the suspension of production of most film and television content.
That said the company’s direct to consumer business was going from strength to strength showing overall second quarter revenue growth of 59% compared with the same period of 2020 to total $3.999 billion. Q2 net losses for the business line fell from $805 million in 2020 to $290 million, due mainly to improved results at Hulu, and to a lesser extent, at ESPN+. The increase at Hulu was said to be attributable to subscription revenue growth and higher advertising revenue, partially offset by an increase in programming and production costs driven by higher subscriber-based fees for programming the live television service. Subscription revenue growth was due to an increase in customers and to a lesser extent higher rates driven by an increase in retail pricing for the Hulu Live TV+ SVOD service in December 2020. Higher advertising revenue was due to increased impressions.
The company said that revenues for Disney+ were comparable to the prior-year quarter as an increase in subscribers was largely offset by higher programming and production, marketing and technology costs. It added that the increases in subscribers and costs reflected the ongoing expansion of Disney+ including launches in additional markets.
At the end of the second quarter, Disney+ smashed through the key three-figure milestone to reach 103.6 million global subscribers. A year ago this figure was just 33.5 million, though the quarterly customer growth was the second slowest in terms of new additions since launch in November 2019. The ESPN+ sports service ended the quarter with 13.8 million customers, up 75% on an annual basis, while Hulu grew 30% annually to reach 41.6 million customers. 37.8 million of these were for the basic SVOD package.
The second quarter results also showed that even though the Linear Networks division reported revenues for the quarter decreasing 4% on an annual basis to $6.7 billion, operating income increased 15% to $2.8 billion.
Offering mitigation for the results, the Walt Disney company noted it that it was still meeting headwinds from the Covid-19 pandemic which while affecting the parks, experiences and products segments most significantly, also continued to cause disruptions in the production and availability of content, including the cancellation or shift of key live sports programming from fiscal 2020 into the first quarter of fiscal 2021, as well as the suspension of production of most film and television content.
That said the company’s direct to consumer business was going from strength to strength showing overall second quarter revenue growth of 59% compared with the same period of 2020 to total $3.999 billion. Q2 net losses for the business line fell from $805 million in 2020 to $290 million, due mainly to improved results at Hulu, and to a lesser extent, at ESPN+. The increase at Hulu was said to be attributable to subscription revenue growth and higher advertising revenue, partially offset by an increase in programming and production costs driven by higher subscriber-based fees for programming the live television service. Subscription revenue growth was due to an increase in customers and to a lesser extent higher rates driven by an increase in retail pricing for the Hulu Live TV+ SVOD service in December 2020. Higher advertising revenue was due to increased impressions.
The company said that revenues for Disney+ were comparable to the prior-year quarter as an increase in subscribers was largely offset by higher programming and production, marketing and technology costs. It added that the increases in subscribers and costs reflected the ongoing expansion of Disney+ including launches in additional markets.
At the end of the second quarter, Disney+ smashed through the key three-figure milestone to reach 103.6 million global subscribers. A year ago this figure was just 33.5 million, though the quarterly customer growth was the second slowest in terms of new additions since launch in November 2019. The ESPN+ sports service ended the quarter with 13.8 million customers, up 75% on an annual basis, while Hulu grew 30% annually to reach 41.6 million customers. 37.8 million of these were for the basic SVOD package.
The second quarter results also showed that even though the Linear Networks division reported revenues for the quarter decreasing 4% on an annual basis to $6.7 billion, operating income increased 15% to $2.8 billion.
