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Disney (DIS) Warns Slow Disney+ Subscriber Growth in Fiscal Q4

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Disney’s (DIS - Free Report) shares ended the session down 4.1% on Tuesday after CEO Bob Chapek warned that global subscriber growth for the company’s flagship streaming service, Disney+ will slow down for the quarter ending in September, per a Wall Street Journal report.

Disney expects to add low single-digit millions of streaming subscribers in the September ended fiscal fourth quarter, excluding Hotstar, which is Disney's streaming service for India.

The company cited that mobilizing partners in Latin America to push Disney’s new Star+ streaming service has impacted subscriber growth in the fiscal fourth quarter. The Star+ rollout has seen its challenges with the platform, having to adapt to 18 different markets, eight separate pay-TV distribution agreements in seven different currencies, across six different platforms.

Moreover, the postponement of the Indian Premier League, which airs on Disney’s Hotstar, and short-term production delays due to a spurt in the Delta variant of coronavirus have been major headwinds.

Nonetheless, this Zacks Rank #3 (Hold) company expects Disney+ subscriptions to hit its long-term targets while anticipating uneven growth in the shorter term. Disney projects 230 million to 260 million Disney+ subscribers by 2024. The streaming service netted 12.4 million net new subscribers to stand at 116 million worldwide as of Jul 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Strong Content Lineup Holds Promise

The Disney+ Day on Nov 12 is part of Disney’s plans to boost growth of its streaming service. The company will host the day as a global celebration for subscribers of the popular streaming service that brings content from Disney, Pixar, Marvel, Star Wars, and the Star streaming service in international markets.

The program includes the Disney+ premiere of Shang-Chi and the Legend of the Ten Rings and Jungle Cruise being made available for all subscribers at no additional charge.

Besides, several Walt Disney Animation Studios shorts will also be made available for the first time on Disney+, including Frozen Fever, Feast, Paperman, and the Oscar-nominated Get A Horse!.

The service will also be rolling out a large selection of new offerings, including Home Sweet Home Alone (a Disney+ reimagining of the Home Alone franchise), Olaf Presents (a new series of Frozen shorts retelling classic Disney tales), Ciao Alberto (featuring characters from Pixar’s Luca), and the first five episodes of Season 2 of The World According to Jeff Goldblum.

Currently, Walt Disney Studios has 61 new movies and 17 series in production, and the Disney TV group has hundreds of programs in production.

Moreover, ESPN is looking to expand into sports wagering in an attempt to appeal to a much younger sports fan base.

The company is also planning special events for its Parks division, special deals through its retail channels, and promotional activities across ABC, Disney Channel, ESPN and ESPN+, Freeform, FX, Hulu, and National Geographic in the United States.

Disney+ will also add some important new international markets when it debuts in South Korea and Taiwan on Nov 12, and in Hong Kong on Nov 16. This is expected to aid international subscriber growth and revenues to compete better with the likes of Netflix (NFLX - Free Report) , Apple TV+, Comcast’s (CMCSA - Free Report) Peacock, and AT&T (T - Free Report) owned HBO and HBO Max among others.

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