Small Screen: Disney+, Content Creation Costs

Key Takeaways:

• A notable trend in 3Q22 has been streamers exceeding subscriber growth expectations, but missing on the topline and earnings, suggesting a potential combination of pricing pressure and rising acquisition costs

• Profitability headwinds for SVOD services are likely to persist given content creation costs along with the swells in ad spend associated with timely promotions. Per Pathmatics Advertiser data, Disney+ ramped up US ad spend 77% MoM in Sep’22 likely to promote Disney+ day along with the launch of Star Wars: Andor

• Top performance metrics:

  • Reported Disney+, Hulu, and ESPN+ subs in Disney’s fiscal 4Q were up 39%, 8%, and 42% YoY, respectively. Per Sensor Tower estimates, worldwide mobile app installs of Disney+ were up 40% YoY in 3Q22 vs 8% for Hotstar, 3% for ESPN, and -11% for the maturing Hulu

  • Perhaps aided by its new Walmart partnership, Paramount+’s mobile app installs and MAUs soared, up 44% YoY (9% QoQ) and 63% YoY (10% QoQ), respectively in 3Q22. The company added 4.6mn Paramount+ subs per its 3Q22 report with reported total subs up 80% YoY (6% QoQ)

  • WarnerBros Discovery continues its integration efforts between HBO Max and Discovery+ into one streaming service to be launched in spring 2023

  • Integration for HBO Max and Discovery+ presents international expansion opportunities. Per Sensor Tower estimates, HBO Max has a strong presence in LatAm (with 18mn MAUs as of Oct ‘22) while Discovery has yet to launch in the market (save for Brazil where it has 1mn MAUs). Alternatively, Discovery's foothold in Western Europe and India is strong with 30% of the app’s total MAUs coming from India, Italy, and the UK as of Oct' 22 (countries where HBO Max has yet to launch)

For more information, request the full report from reports@sensortower.com.