Disney will launch a new ad-supported streaming service in the US in December, overtaking Netflix in the race for paid subscribers.
The company reported 221.1 million subscribers across its three streaming platforms in early July.
That put it just ahead of Netflix, which lost accounts.
However, Disney warned that losing the streaming rights to cricket in India would slow subscriber growth compared to previous projections.
The company, which also owns adult TV streaming platform Hulu and sports-focused ESPN+, said demand for its Disney+ product remains strong.
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Pandemic lockdowns have given streaming services like Disney a boost, but the easing of Covid restrictions doesn’t appear to be stopping them from attracting new customers.
The company added 14.4 million Disney+ subscribers in the quarter, many of them outside the US — far more than analysts were expecting.
Later this year, it will launch a new ad-supported service that will continue to be billed at the current subscription price of $7.99. The fee for the ad-free service increases to $10.99 per month.
The company plans to launch its ad-supported service outside of the US next year.
Executives said they don’t expect the price hike to deter customers in the long run. The firm is also seeing strong interest from companies hoping to promote the new service, they said.
“We are in a position of strength with record advertising exposure ahead of time,” CEO Bob Chapek told analysts on a conference call to discuss the company’s financial results.
Disney’s subscriber gains came at a heavy cost as its streaming business lost $1.1 billion in the quarter.
Executives said they expect losses to peak this year. Meanwhile, a sharp rebound in theme park attendance since the worst of the pandemic has given the company a large financial cushion.
Total revenue for the April-June period rose 26% year over year, taking profits to $1.5 billion.
Shares of the company rose more than 6% in after-hours trading after the company released its results.
Paolo Pescatore, an analyst at PP Foresight, called it a “defining moment in the streaming wars” and said Disney has more room to grow than arch-rival Netflix.
Netflix lost nearly a million accounts last quarter, taking 220.67 million subscribers.
The results “strongly underscore my belief that Disney is in a different phase of growth than Netflix,” said Mr. Pescatore. “It has yet to attract millions of users as it continues to expand into new markets and launch new blockbuster shows.”
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