Walt Disney Co.
emerged as a formidable contender in a rapidly escalating battle among online-video platforms, as the number of subscribers to its new streaming service more than doubled in its first three months.Disney+ had 28.6 million subscribers through Monday, Chief Executive
Robert Iger
said Tuesday, up from 10 million in November, when the service launched.The launch of Disney+ has been enormously successful, exceeding even our greatest expectations, Mr. Iger said on a conference call discussing quarterly financial results.
Walt Disneys revenue by segment and change from previous year
Segment revenue
He said the services trove of older programming, ranging from classic Disney movies to 30 seasons of The Simpsons, has been as popular with subscribers as what he characterized as a modestly sized library of new, original content. About 65% of Disney+ users who watched The Mandalorian, the buzzy new Star Wars series, watched 10 other movies or shows on the service, Mr. Iger said.
During last Sundays Super Bowl, the studio teased a spate of forthcoming Marvel series like Captain America spinoff The Falcon and the Winter Soldier, which debuts in August, and WandaVision in December. The next season of The Mandalorian is to begin in November, Mr. Iger said, while the company develops other Star Wars series based on Obi-Wan Kenobi and Rogue One.
The companys fledgling service is already competing with
Netflix Inc.
and
Amazon.com Inc.,
in addition to
Apple Inc.s
recently launched Apple TV+. But later this year the field will become more crowded with the planned launches of
Comcast Corp.
s Peacock and
AT&T Inc.s
HBO Max.
It took Netflix, the largest streaming platform, significantly longer to reach the number of subscribers Disney+ acquired in three months. Netflix started offering streaming in 2007 and created a stand-alone streaming plan in 2010. But it didnt cross 28 million subscribers until late 2012, according to its financial statements.
In Netflixs early years, cable TV subscriptions were still growing and cord-cutting hadnt gained momentum. Now, the pool of potential streaming customers is much larger. Still, Disney is also competing in a more crowded field than Netflix was early on.
Netflix now boasts 167 million subscribers.
Disney+ costs $6.99, versus the $12.99 Netflix charges for its most popular plan.
Subscribers can bundle Disney+ with ESPN+ and Hulualso owned by Disneyfor $12.99 monthly.
Mr. Iger said about 20% of Disney+ subscribers signed up through a partnership with
Verizon Com
munications Inc., whose unlimited-data customers are eligible for a free year of the streaming service.
Disney made its foray into streaming partly as a response to concerns that surfaced on Wall Street in 2015 after the company suffered subscriber losses at its highly profitable ESPN division. Shares fell as investors worried about the long-term effects of the company competing with Netflix.
Although most Disney+ subscribers are in the U.S., the service is also available in Canada, Australia, New Zealand and the Netherlands. Disney+ begins piping content into homes in the U.K. and some European countries like France and Germany in late March. Mr. Iger said the service would become available in more European countries, including Portugal, this summer.
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At the companys film division, revenue and profit more than doubled compared with the same period a year earlier. Frozen 2 and Star Wars: The Rise of Skywalker both had strong box-office openings before each going on to gross over $1 billion globally. Disney made more than $11 billion at the global box office last year, beating the record $7.6 billion, which it also set, in 2016.
Mr. Iger said it would be difficult this year to keep pace with that performance. The 2020 slate includes two Pixar titles, two Marvel titles and the live-action remake Mulan, due in late March.
Disneys shares were essentially unchanged in after-hours trading as earnings beat analysts predictions.
The company said domestic attendance at its amusement parks increased during the quarter, with spending among visitors rising 10%. But Disney finance chief
Christine McCarthy
said the company was bracing for losses in Asia after closing down its parks in Shanghai and Hong Kong amid the coronavirus outbreak that has rocked the region.
The company estimates that if Shanghai Disneyland remains closed for two months, the financial impact could be about $135 million, she said. A closure in Hong Kong of the same duration could cost Disney about $40 million, Ms. McCarthy said. Combined with attendance declines related to political unrest in Hong Kong, she said, the total financial impact at that location could be around $145 million over two months.
Disney reported net income of $2.11 billion in the first quarter, or $1.16 a share, which fell from a year earlier. On an adjusted basis, earnings were $1.53 a share, compared with analysts estimate of $1.46 a share, according to FactSet.
Revenue across the company rose 36% from a year earlier to $20.86 billion, slightly exceeding analysts consensus of $20.76 billion.
That user base, which reflects the total as of Dec. 28, 2019, came just months after Disney reported signing up 10 million subscribers to its flagship streaming platform that launched in November.
Disneys business line that includes Hulu, ESPN+ and Disney+ more than quadrupled its revenue, but reported a wider operating loss compared with a year earlier. The head of the companys Hulu business, along with Disneys head of its Twentieth Century movie studio, both left the company last week.
Revenue in Disneys studio entertainment business more than doubled. Operating income jumped to $948 million, up from $309 million. The companys films performed particularly well at the box office in 2019, with seven cracking the top 10 world-wide, including Avengers: Endgame, The Lion King and Frozen 2.
Write to Allison Prang at allison.prang@wsj.com
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