Netflix kicked off the current earnings season by kneeing all of Hollywood in the crotch. A subscriber miss, sure, but most troubling was the company’s projection of just 2.5 million new customers in the next quarter. The company’s stock tumbled, and it dragged down with it Disney, ViacomCBS and the other entertainment companies that have bet their futures on the streaming revolution. But then, not two weeks later, Disney surprised Wall Street on Wednesday by reporting the addition of nearly 12 million subscribers to Disney+, sending its stock price flying.
I don’t buy the sky-is-falling theory with Netflix, which now boasts 222 million subscribers worldwide. And, in fact, I think the more relevant question to ask right now is why Disney did so well in adding subscribers during this quarter. To understand what’s really going on, we have to acknowledge what helped Disney reach its current total of 130 million subscribers, or 196 million with Hulu and ESPN+ included. Everyone in the industry is trying to determine the growth trajectory for the next few years, and elucidating Disney’s growth trajectory can act as a guiding light.