Disney earnings: Q4, 2022 - Disney+ needs more than just Marvel & Star Wars to reach the next level

9 November, 2022

As earnings season wraps up, The Walt Disney Company is set to report its last quarter results before introducing its highly-anticipated ad-supported tier for Disney+ in December. 

Disney is responsible for two of the 10 highest-grossing worldwide films in 2022 with Marvel blockbusters Doctor Strange in the Multiverse of Madness and Thor: Love and Thunder while its domestic parks continue to generate massive revenues. Yet all eyes will be glued to its direct-to-consumer division.

Disney+, the company’s flagship streaming service, has added 22.3 million global subscribers this year while sibling streamers Hulu (+900,000) and ESPN+ (+1.5 million) have also grown. However, growth in the highly competitive United States and Canada (UCAN) market has slowed, with Disney+ adding just 1.6 million new subscribers through the first three quarters of its fiscal year. Can the company reignite its domestic growth?

Disney (19.8%) had the highest corporate demand share with US audiences in the July-October quarter, ahead of rivals such as Warner Bros. Discovery (17.9%), Paramount Global (12.4%) and NBCUniversal (9.8%). The company also boasts impressive demand for its movie catalog despite having the smallest film library among HBO Max, Amazon Prime Video, Netflix and Peacock. However, Disney+ is in eighth place in total on-platform TV demand share, which may speak to the streamer’s comparatively smaller library of TV titles.

Disney+ (8.5%) ranked third in originals demand share in the US behind Netflix (41.5%) and Amazon Prime Video (9.3%). Despite a steady stream of blockbuster franchise series, Disney+’s original demand share has actually fallen from 9.2% in Q3 2021, calling into question the effectiveness of Marvel and Star Wars series as subscription growth drivers for the platform. 

US Corporate Demand Share - July-October 2022

  • Corporate demand share assesses the long-term viability of the top media companies as they look to consolidate their original content’s availability exclusively onto their own platforms.
  • This chart reveals the power of Disney as a content creator for both its in-house platforms and as a licenser of content externally (for example, ABC’s Grey’s Anatomy still streams on Netflix). 
  • Disney’s corporate demand share actually rose 0.1% from last quarter, which is likely due in part to the release of Ms. Marvel, She-Hulk, Hocus Pocus 2 and Andor on Disney+ as well as the return of The Handmaid’s Tale on Hulu. 
  • Warner Bros. Discovery’s recent restructure of DC Studios is designed to wring more value out of its comic book intellectual property. Should the company somehow manage to match Marvel’s cultural footprint, WBD could give Disney serious competition for the top spot in quarters to come. 

United States Movie Demand & Supply — Q3 2022

  • This chart helps demonstrate which streamers are getting the highest ROI for their overall movie efforts — from original productions and licensed content to library titles.
  • Despite producing the smallest supply share of the major streamers (4.3%), Disney+’s demand share for on-platform movies in the US ranks third at 11.5%. This speaks to the audience affinity for the company’s major branded franchise power across Marvel, Star Wars, Pixar and beyond. Disney’s box office dominance over the last decade seems to have successfully transitioned to the company’s DTC efforts.
  • The company also announced in early October that Hocus Pocus 2 became the platform’s most-watched Disney film ever by hours viewed in its opening weekend. In its Sept. 30-Oct. 2 debut frame, Hocus Pocus 2 was the fifth most in-demand movie title in the US (47.75x). From Sept. 30-Oct. 30, Hocus Pocus 2 is the fourth most in-demand movie title across all platforms in the US with 54.57x more demand than the average movie. 
  • The mix of high performing Disney+ exclusive films as well as theatrical blockbusters that quickly migrate to the platform have kept the service top of mind for consumers. 

US On-Platform Demand Share - Q3 2022

  • On-platform demand share is an indicator of which platforms are more likely to be a consumer’s default “streaming home.”
  • At 6.0%, Disney+ remained flat compared to the previous quarter. However, this is partially due to the streamer’s smaller library of total titles as compared to its SVOD competitors. 
  • This is also offset in part by Hulu’s industry leading demand share, which rose 0.4% from last quarter to overtake Netflix for the top spot. Hulu continues to benefit from its next day air capability for linear series such as ABC’s Abbott Elementary and FX’s Atlanta.
  • Combined, Hulu and Disney+ control a dominant 25.6% of US on-platform demand share well ahead of Netflix (18.2%) and the eventual combination of HBO Max and Discovery+ (17.8%). 

US Streaming Originals Demand Share - Q3 2022

  • Since Q3 2021, Disney+’s demand share of originals in the US has fallen from 9.2% to 8.5%. However, its performance in the most recent quarter actually represents a 0.1% improvement.
  • Marvel and Star Wars series have proven to be effective retention tools, but may no longer be as strong at driving growth as fans of these franchises are already subscribed to Disney+.
  • Hulu has now seen an increase in its demand share of originals in the US in two consecutive quarters, rising 0.4% in that span. The streamer released a string of critically successful originals such as Reboot, The Patient and the latest season of The Handmaid’s Tale in the most recent quarter.
  • Combined, Disney+ and Hulu control 15.9% of the US demand share for originals in the quarter, second only to Netflix (41.5%). 

Global Originals Demand Share — Q1 2020-Q3 2022

  • From Q1 2020-Present, Disney+ has seen its share of global originals demand increase from 4.2% to 9.3%. Hulu only operates in the U.S. and many of its originals are housed under the Disney Star brand overseas. In the same span, its demand share has stayed relatively stable, ticking down from 5.9% to 5.7% and showing impressive consistency over a multi-year stretch. 
  • Despite Disney+’s overall increase, it saw its worldwide originals demand share fall from 9.9% to 9.3% in the most recent quarter. 
  • While She-Hulk (24th) and Ms. Marvel (30th) both ranked among the top 30 most in-demand TV series worldwide in the July-Oct. quarter, the series — along with Andor — still rank below their Marvel and Star Wars counterparts in average audience demand. 
  • Average worldwide demand in the first 30 days post-premiere for She-Hulk (71.5x), Ms. Marvel (46.58x) and Andor (48.82x) came in lower than many previous Disney+ franchise series such as WandaVision (85.42x), Loki (78.46x), Moon Knight (88.30x), Obi-Wan Kenobi (75.16x) and The Book of Boba Fett (57.31x).

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