Disney+ 'Journey' Has 'Only Just Begun,' Says CEO Chapek

Disney+ ended fiscal Q3 July 3 with 116.6 million paid subscribers, up 12.4 million from fiscal Q2, Disney announced Thursday. The subscriber count exceeded analysts’ consensus estimates of 115.2 million at the end of the quarter. Hotstar in India generated about 80% of the Q3 subscriber net adds, and “its contribution to the overall sub base is approaching the high end of management's 30%-40% long-term target,” Cowen told investors on Friday.

Disney+ Day, scheduled for Nov. 12, will be “an unprecedented company-wide cross-promotional campaign” to boost consumer adoption among holdouts to the service, said CEO Bob Chapek on a Thursday investor call. The event will feature a “balanced approach” to global and local content, he said.

The “robust pipeline of content” continues to fuel Disney+ subscriber growth, said Chapek. A highlight will be the Thanksgiving Day debut of The Beatles: Get Back, Peter Jackson’s six-episode documentary, he said.

Disney is sticking with the “three-pronged strategy” it adopted last year to distribute feature films amid the COVID-19 pandemic, said Chapek. Some films went direct to theaters, others direct to Disney+, still others as hybrids between theatrical showings and as $29.99 Premier Access options on Disney+. “We needed to find alternative ways to bring our movies to consumers while theaters were closed, and once they began to reopen, there was still widespread reluctance to return,” said the CEO.

Distribution decisions will continue to be made film by film, “based on global marketplace conditions and consumer behavior,” said Chapek. “We will continue to utilize all available options going forward, learn from insights gained with each release and innovate accordingly, while always doing what we believe is in the best interest of the film and the best interest of our constituents.”

Disney, like other studios, lives “in a very uncertain world in terms of the recovery of some of our markets” in theatrical exhibition, said Chapek. “We’ve said from the very beginning that we value flexibility in being able to make as many last-minute calls as we can” on feature film distribution, “given what we see in the marketplace,” he said. “When we planned our schedule that we’re executing right now, we did not anticipate, nor did I think anybody, the resurgence of COVID with the delta variant that would have such a significant impact on the marketplace.”

The company feels “really great” about the “sub trajectory” of Disney+, said Chapek. “Our retention is very healthy across the globe,” despite “some price increases over the past few quarters,” he said. “That our churn is so low, our engagement is so high, our retention is so high amongst the local corridors where we’re taking price increases, I think, says everything about it.”

Disney+ is in “the first inning of the first game of a very long season,” said Chapek. “I would caution not to come to any conclusions about the size of the market.” Disney has identified a total addressable market of 1.1 billion households globally for Disney+, “and we’ve only just begun our journey,” he said.