The Walt Disney Company (DIS 0.85%) reported fiscal 2022 first-quarter results on Wednesday, Feb. 9. The House of Mouse pleasantly surprised shareholders with better-than-expected revenue and profits.
Rival Netflix (NFLX 0.15%) reported its results a few weeks earlier, and now that investors have seen figures from both, a few items jump out.
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Subscriber growth
Disney trounced Netflix in subscriber growth in their most recent quarters. Across its three services (Disney+, ESPN+, and Hulu), it added 17.4 million subs from the previous quarter. To make the figures look even better, management noted that subscriber growth in the second half of its fiscal year would be better than the first half.
Meanwhile, Netflix added 8.3 million streaming subscribers in its most recent quarter ended Dec. 31. Admittedly, Netflix is only one service competing against three, but it added less than half the subs Disney added. To make matters worse, Netflix forecasted it would add 2.5 million subs in its next quarter, far fewer than the average it has typically reported in the period.
Disney's more-than-double sub growth and optimistic forecast for the rest of the year coupled with Netflix's pessimism is one metric that made Netflix look bad.
The average revenue per subscriber
In addition to reporting subscriber figures, Disney and Netflix also reveal the average revenue per user. Of course, the lower the price, the easier it is to attract a subscriber. In that regard, Netflix is not making it easy. The streaming pioneer boasts a total of 222 million subscribers, and its average revenue per user ranges from $8.14 in Latin America to $14.78 in North America.
Meanwhile, Disney claims 194 million subs, but 45.9 million of those are generating an average revenue per user of just $1.03. To be fair, Disney has 4.3 million subs from its Live TV streaming service at an average revenue per user of $87.
That said, the fact that Disney has 45.9 million subs generating a little over $1 per month makes Netflix's ability to retain more overall subscribers at higher prices look good.
What the market thinks
Netflix and Disney stocks are down for the year. However, Netflix is down 35%, while Disney is down 3.5%. Admittedly, the market performance of these two companies is affected by more than the two factors mentioned in this article. Still, the dramatic difference in performance goes to highlight that the market thought better of Disney's subscriber growth.
The competition is unlikely to remain one-sided. Investors should look out for how Netflix responds to Disney's accelerated subscriber growth through lower pricing.
