Disney Plus Comes Close To Hulu's Total Subs In One Quarter

Disney Plus is off to a strong start.

In its inaugural quarter, the subscription video on demand (SVOD) service brought in 10 million subscribers on the first day and 26.5 million subscribers over Q4, Disney said during its Q4 earnings Tuesday.

By contrast, twelve-year-old Hulu, which is majority owned by Disney, totals 30.4 million users.

Disney Plus got 20% of its subscribers through its co-marketing with Verizon, which offered a free year of the subscription for select subscribers. Fifty percent subscribed directly through Disney Plus. And the rest came from other partners, including Apple, Google, LG, Microsoft, Samsung, Sony and Roku.

Disney CEO Bob Iger cited a number of factors behind the successful launch – which exceeded Disney’s subscriber estimates – including a good user interface, an accessible price point and Disney’s bundling of the service with other offers, which reduced churn rates.

Disney Plus subscribers also varied their content consumption. “It’s not just about original content,” Iger said.

For example, 65% of people who watch Disney’s original show “The Mandalorian” watched 10 other things on the service.

Hulu and ESPN Plus

Disney Plus is just one of Disney’s three direct-to-consumer offerings, and the other two – ESPN Plus and Hulu – include ads and also added paid subscribers. ESPN Plus logged 6.6 million subscribers, up from 1.4 million subscribers a year before. And Hulu subscribers went up 33% from a year before to 30.4 million.

Hulu’s paid SVOD subscribers went from 21.1 million to 27.2 million. And people choosing a package that combined SVOD and live TV rose 88%, from 1.7 million to 3.2 million subscribers.

Hulu’s average revenue per user (ARPU) of $13.15 for Q4 reveals how much money it makes from advertising.

Two-thirds of its subscribers choose the ad-supported $5.99 per month offering (though Hulu has run discounts, including a Black Friday $1.99 per month offer). Ad-free costs $11.99 per month. So Hulu’s ARPU far exceeds an average subscription price even with discounts.

And Iger noted that Hulu attracts a different audience.

“The demographics of Hulu are substantially lower than some of our linear networks,” he said.

Last Friday, Hulu CEO Randy Freer exited amid a Disney-led restructuring, which moved Hulu within its direct-to-consumer unit to allow it to work closer with Disney’s other streaming offerings around promotion and bundling.

In the coming months, Disney will have to weather the launch of competing SVOD and AVOD services, including NBCU’s Peacock and WarnerMedia’s HBO Max.

But Disney will soon roll out Disney Plus internationally, and Hulu’s international expansion will follow in 2021.

And Disney is weathering heavy losses – such as an estimated $900 million in operating losses in Q2 – as it ramps up the service and pays for original content and promoting the platform. It said it doesn’t plan to turn a profit until 2024.

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