Walt Disney Co. DIS -0.02% is expected to show a modest increase in subscriptions to its Disney+ service in its December quarter as the streamer looks to revive momentum after its explosive growth during the first year of the Covid-19 pandemic.
Analysts expect Disney+ to add seven million new customers to the service in the quarter, bringing its total to 125.4 million subscribers, according to a FactSet poll. That number would follow a disappointing two million subscribers added in the quarter that ended last October.
The world’s largest entertainment company reports its fiscal first-quarter earnings Wednesday afternoon—its first earnings report since longtime executive Robert Iger left the company as executive chairman at the end of December. Disney named Susan Arnold as his replacement.
Disney is likely to face questions about the next frontiers for growth at Disney+ as expectations for more sign-ups in the U.S. have been dwindling. It might also face questions about decisions in recent months to send some films straight to its streaming service without a theatrical release, even as many viewers returned to movie theaters.
Disney’s biggest streaming rival, Netflix Inc., last month said it added 8.3 million subscribers, fewer than investors had expected, and ratcheted down its estimates for growth.
Disney Chief Executive Bob Chapek said in November that the company is still on track to reach around 260 million customers by the end of fiscal 2024.
Analysts expect Disney’s theme parks to show a strong recovery in sales despite the spread of the Omicron variant of the coronavirus over the holiday season. When vaccination rates rose last year, ticket sales ramped up and theme park revenue jumped 99% in the company’s fiscal fourth quarter.
Analysts at KeyBanc Capital Markets wrote this week that they expect revenue at the company’s Parks & Experiences division to grow 56% in fiscal 2022 and return to its pre-pandemic peak next year.
Ticket sales ramped up and theme park revenue jumped in Disney’s fiscal fourth quarter.
Photo: Alvaro Blanco (Es-Es/Zuma Press
Investors, meanwhile, have punished Disney because of slowing subscriber growth. The company’s share price has fallen about 30% from highs of nearly $202 reached in March 2021. Shares are down about 8% since the beginning of the year.
“Clearly the market is becoming more negative on the streaming story. People aren’t getting as much credit as they were a year ago, and Disney is no exception,” said analyst Doug Creutz of Cowen Inc.
Last quarter, Mr. Chapek said he expected that a stream of new shows and films out in the second half of 2022 would help reboot demand for Disney+. Those include the spy thriller series “Andor,” the superhero miniseries “Ms. Marvel” and a live action reboot of “Pinocchio.”
Write to Robbie Whelan at [email protected]
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