Disney+ stumble puts damper on streaming-service birthday party

Walt Disney Co. trotted out its top creative executives to tout new movies and TV shows coming to the Disney+ streaming service — a day after shocking investors with lower-than-expected subscriber growth.

Marvel chief Kevin Feige previewed Hawkeye, a superhero series starring Jeremy Renner that will be released Nov. 24. Lucasfilm boss Kathleen Kennedy teased an Obi-wan Kenobi series featuring Ewan Mcgregor that debuts next year.

“We're still just getting started,” Kareem Daniel, the head of Disney's media and entertainment distribution division, said at the event.

Disney needs to reassure fans and investors as it celebrates the second birthday of Disney+, a service that's come to dominate the company's present as well as its future. Management on Wednesday reported 2.1 million new subscribers for the Us$8-a-month service, the slowest growth since launch and well below even Wall Street's reduced expectations. Disney shares tumbled 7.1 per cent.

The previews are part of a broader promotion Friday that the company is calling Disney+ Day. It includes a one-month subscription for US$2, new movies, such as the previously only-in-theatres Shang-chi and the Legend of the Ten Rings, and a Disney+ category on Jeopardy! Friday night.

When Disney unveiled the service in November 2019, nobody was more surprised by the reaction than executives at the company's headquarters in Burbank, Calif. Disney+ had 10 million customers in its first day and nearly 27 million by the end of the quarter six weeks later. Then came the pandemic, which trapped millions of families in their homes and led to a further surge in sign-ups. Consumers lapped up programs such as the Star Wars TV spinoff The Mandalorian and Marvel's Wandavision. A new product in India, Disney+ Hotstar brought another cascade of customers.

By the first anniversary, chief executive Bob Chapek was willing to significantly increase his forecast.

At an investor event last December, he said Disney+ subscribers could rise to as many as 260 million globally by 2024, up from a prior projection of as many as 90 million. Investors sent the stock up 14 per cent the next day. The company has been trying to live up to that enthusiasm ever since. Disney shares are down 11 per cent this year, while the S&P 500 is up 24 per cent.

One big problem is that Disney+ has much less content than some of its main rivals, according to Richard Broughton of Ampere Analysis.

The service has fewer than 10,000 hours of movies and TV shows, compared with 35,000 hours on Netflix Inc. and Discovery+, and 20,000 to 30,000 hours on Paramount+, Amazon Prime and Peacock, Broughton estimated. That makes the service heavily dependent on a few high-profile titles, such as those from its Marvel and Star Wars brands.

On a conference call with analysts Wednesday, Chapek said Disney+ will see much stronger growth in the second half of the fiscal year. That will be driven first by the addition of new markets and then by new programming.

The company plans to more than double the number of countries where Disney+ is available to 160 by 2023.