US entertainment giant Disney said Wednesday its flagship streaming service grew slower than expected in the recently ended quarter as pandemic headwinds have begun to bite.
Disney+ has reached 118 million subscribers worldwide, but analysts had predicted millions more would sign up, resulting in a miss that saw the entertainment giant’s share price slip in after-market trades.
Disney Company chief executive Bob Chapek told analysts on an earnings call that the two-year-old service has faced some pandemic headwinds to landing new shows and films.
“Obviously, we are only in year two of the Disney+ launch and the hunger for content for the service is extraordinary. And when you have that happen at the same time that you have a pandemic and you have to shut down production, that is not a good combination,” he said.
Rival Netflix has promised to significantly bolster its line-up of original programming after suffering from pandemic-caused production delays.
Disappointing growth at Disney+ came as the company tried to regain momentum in its travel and theme park businesses, which have suffered due to the pandemic.
In its earnings release, the group attributed the decline to cheaper subscriptions in some markets, such as India and Indonesia. It also noted that Disney+ is facing cost increases in terms of content production, marketing, and technology.
Disney stock fell four percent by close of trading Wednesday. But the very popular streaming service benefits from the controversial strategy of its parent company, which consists of releasing some films simultaneously in theaters and online, with an additional cost for subscribers to the platform.
After Mulan in 2020, Black Widow and Jungle Cruise were released this summer to the great displeasure of theaters and stars such as Scarlett Johansson, who criticized a loss of earnings for them.