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Disney Plus growth slows down too - is the pandemic boom over?
The numbers do not lie and the streaming market will have to adjust... again
The numbers are in and they are positive - "so why the troubled headline?" one might ask. Βecause these numbers, combined with a set of others, now form a trend. It seems like the explosive growth of streaming services, that we all witnessed and were a part of during the COVID-19 pandemic and its extended periods of lockdown, has come to an end. Disney announced that its digital entertainment service, Disney Plus, has reached 103.6 million subscribers worldwide as of April 3, adding 8.7 million more during the first quarter of the year. It's a number other streaming services would be proud of, except... analysts were expecting around 109.5 million instead.
In Wall Street terms, that is - for whatever reason - almost the same thing as failing to hit a target, even though Disney had never set a specific one for each quarter. But those 8.7 million subscribers, truth be told, do seem far fewer than the ones the company managed to attract in the previous quarter (more than 20 million globally), so regardless of analyst firm expectations the growth rate of Disney Plus is just not the same it was a few short months ago.
This news comes after Netflix's respective announcement at the end of April, which was much worse: the leader of streaming services added just 3.98 million subscribers globally during Q1 2021, 2 million short of the 6 that the company expected to attract in that period. Netflix confirmed it is expecting to only add 1 million (!) subscribers in Q2 2021 worldwide, practically recognizing that it is approaching saturation point quicker than many of us have thought it would. That point had already been reached in the Americas but it was generally believed that there was still considerable room for growth in overseas markets. That may not be the case after all.
As things stand right now Disney Plus's subscribers are thought to have exceeded the 105 million mark while Netflix's are probably approaching the 209 million mark. The difference is more than impressive... until one takes into account the fact that Disney Plus has been around for less than 18 months. Disney's service is also commercially available in far fewer countries than Netflix is (around 50 in all), so there is definitely room for expansion to new markets in the long term. Disney itself seems to think so, as CEO Bob Chapek and CFO Christine McCarthy emphasize that Disney Plus is still on track to reach the company's target of 230-260 million subscribers by the end of 2024.
In any case, the boost both DisneyPlus and Netflix were given by the pandemic lockdowns of 2020 will probably not be repeated in 2021 (unless COVID-19 has other ideas and we all end up confined into our homes again in winter). Disney Plus has made the most of that situation, while Netflix didn’t because it simply did not have as much room for growth at its disposal. What is not clear is how Disney Plus or Netflix will fare in 2022 and beyond, when subscribing to these services will be more of a conscious choice and less of a forced one - especially as competitors such as Peacock or Paramount Plus start filling out their own libraries, becoming more interesting.
The pandemic boom is probably over for every streaming service, for better or worse. Which of the two proves to be the case, remains to be seen.