The Information has reported that “the streaming wars are starting to get interesting”. Disney reported a dramatic slowdown in subscriber growth at its Disney+ service—it added just 2m subscribers in July-September, the weakest growth since its launch in 2019: “More strikingly, Disney executives indicated that Disney+ won’t return to meaningful growth until the second half of its 2022 fiscal year, as it expands into new markets and gets more new movies and TV shows onto the service”.
The Information says what Disney really needs is new shows that can attract subscribers but “The question is whether even that will be enough. Disney+ is facing a much more crowded streaming market now than when it launched, as most major entertainment companies launched their streaming offerings in the past 18 months. Netflix’s growth has also slowed”.
The Disney CFO has noted that programming costs are escalating, pushed by the rising demand for content (which is also why independent production studios are selling themselves for high prices).
For Disney – and other streaming companies – the extra cost comes as their cable cash cows are losing steam. For example, Disney’s operating profits at its ‘old-fashioned’ TV business fell 11% in its last quarter. “The upshot is that the old-line entertainment companies are in for a few years of mediocre profit growth. The transition to streaming from cable was always going to be a costly one. The numbers are beginning to show just how costly”.