When Walt Disney (DIS +0.41%) announced in 2017 that it was working on launching new streaming-TV services, few would have guessed that by 2021, the company would be closing in on Netflix's (NFLX +1.76%) total subscriber count. The House of Mouse reported on Thursday that it ended its fiscal third quarter with 173.7 million subscribers -- just 35.5 million short of Netflix's 209.2 subscribers. 

Here's a closer look at Walt Disney's streaming powerhouse, made up of Disney+, ESPN+, and Hulu.

Image source: Getty Images.

Understanding Disney's streaming business

Walt Disney's namesake Disney+ streaming service saw subscribers climb from 57.5 million in the year-ago quarter to 116 million. Investors should note that this Disney+ subscriber count includes subscribers to the company's international streaming service, Disney+ Hotstar.

Notably, the company's Disney+ subscriber count alone increased by a much greater number sequentially than Netflix's 1.5 million subscriber additions during its most recently reported quarter. Disney+ subscribers grew 12.4 million sequentially.

Of course, Walt Disney's other two streaming services, ESPN+ and Hulu, are doing very well, too. ESPN+ subscribers increased 75% year over year to 13.8 million and Hulu subscribers grew 30% year over year to 41.6 million.

At the rate Disney's streaming services are growing, it seems inevitable that the company's total subscriber count across its services soars past Netflix's. The latter's subscribers only grew 8% year over year in the three months ended June 30.

Disney's major advantage over Netflix

While Disney's streaming services are more affordable than Netflix's, investors should note that Disney arguably has more long-term revenue potential from its streaming business than Netflix because it has made room for advertising in its business model. Sure, Disney+ is an ad-free service. But the company often packages the flagship service in a bundle with ESPN+ and the ad-supported version of Hulu. Further, Disney attempts to upsell Hulu customers with Hulu Live -- a more expensive cable replacement that includes ad-supported live sports and other content.

Indeed, Disney is already seeing growth in revenue per user for both ESPN+ and Hulu being driven by advertising revenue. ESPN+ monthly revenue per subscriber increased from $4.16 in the year-ago period to $4.62. Hulu monthly revenue per subscriber increased from $11.39 to $13.15, and Hulu Live monthly revenue per customer increased from $68.11 to $84.09. While advertising revenue growth wasn't the only catalyst behind these increases, Disney management cited it as a key driver for all three of these increases.

With strong subscriber momentum and ad-fueled content, Walt Disney's streaming business could one day surpass Netflix's.