Nearly nine months after launching, Disney Plus reached 60 million paid subscribers in August, a milestone the company initially told investors it hoped to reach by 2024.
The legacy-media giant deftly bolstered its streaming audience with titles like “The Mandalorian,” “Hamilton,” and “Black Is King,” as well as by bundling it for cheap with its other streaming services, like Hotstar in India.
But, while Disney Plus’ global member base was roughly one-third of Netflix’s at the end of June, its subscribers were much less lucrative, as LightShed analyst Rich Greenfield pointed out on Twitter.
Disney brought in, on average, $4.62 in revenue per paying subscriber during its last quarter, ending in June. Netflix, by comparison, generated $10.80 per average paid subscriber during the comparable period. Disney-owned Hulu’s on-demand subscription, which also earns revenue from advertising, brought in $11.39 per average paying subscriber.
“Not all subs are the same,” Greenfield tweeted.
Disney charges significantly less for Disney Plus than Netflix charges for its service. In the US, Disney Plus costs $7 per month, but can be bought for less in a bundle with Hulu and ESPN Plus, or by purchasing a year’s subscription up front. Netflix sells monthly plans between $9 and $16 in the US, and its most popular package costs $13 per month.
Disney Plus’ average revenue per user was also dragged down last quarter by its price point in India, where it launched during the period as part of a bundle with Disney’s Hotstar streaming service. Excluding Disney Plus Hotstar, the service’s average revenue was $5.31 per paying subscriber, the company said.
But bundles are big part of why Disney Plus has been able to scale so swiftly.
New services often sacrifice revenue or profits to grow audience. Now that Disney has reached the low end of its five-year 60 million to 90 million subscriber target ahead of schedule, investors may want to see that the service is becoming more lucrative as well.
Wells Fargo analyst Steven Cahall asked the company on the earnings call whether it would now start to focus on driving the service to profitability or chase a larger audience.
“We absolutely are going after a bigger market of the number of subscribers as opposed to over rotating to try to get to a profitability number much sooner than we thought,” Bob Chapek, Disney’s CEO, said in response. “I must say the prospect of us hitting our goals as quickly as we are is very encouraging, but what we plan to do is invest even more in our content in order to keep that machine cranked and going.”
Disney is also starting to experiment with other models that might boost Disney’s revenue per user, if successful. It announced during the call plans to release its live-action feature film “Mulan” on Disney Plus for $30 in September, when the film will also hit theaters in places where cinemas are open and Disney Plus has not announced launch plans.
Disney’s early streaming subscribers also appear to be stickier than those of other services, which could work in the service’s favor if it seeks to make more money off those users.
Disney Plus had the second-lowest rate of US churn, or cancellations among subscribers, during the quarter ending June, according to a July report from the subscription-analytics firm Antenna. Disney Plus’ churn rate was second only to Netflix.