You probably didn't get a birthday invitation, but Walt Disney's (DIS 0.01%) namesake streaming service blew out three candles on Saturday. By most accounts, Disney+ is a huge success. It had a whopping 164.2 million paid subscribers by the end of September, a mind-blowing accomplishment in a short amount of time. 

Yet despite the digital platform's impressive growth spurt, investors aren't exactly wowed by the sum of its parts. Disney stock is 31% lower than it was three years ago. And don't let the general market's weakness over the past year and change delude you into thinking that the media giant's return is acceptable. The S&P 500 has risen a respectable 29% since the launch of Disney+.

Most will argue that Disney+ was a genius move by the House of Mouse, burying its own legacy businesses before somebody else beat it to the shovel. However, with Disney+ still at least two years away from profitability -- and potentially hurting more than helping the media conglomerate right now -- it's time to wonder if the service isn't the success we think it has become. 

Mickey Mouse welcoming guests to the Magic Kingdom.

Image source: Disney.

Wan division 

Let's start with the beefy subscriber number that everyone tends to flaunt as a badge of success. There's no denying that 164.2 million accounts worldwide is a lot, but did you know that 37% of them are barely paying for the service? Disney merged its Disney+ offering with India's Hotstar platform that it acquired, and that accounts for 61.3 million of the subscribers. They're paying an average of just $0.58 a month for the service. 

The global average revenue per Disney+ account is a pedestrian $3.91 a month, 5% lower than it was a year ago. The 38% increase Disney is implementing next month in the U.S. for the ad-free plan will go a long way toward beefing up that metric, but it will probably also find a lot of cost-conscious viewers churning out of the service

Let's also not forget that this is a huge drag on Disney's bottom line. The $1.5 billion operating loss for the platform nearly erased all of the linear networks segment's $1.7 billion operating profit. The content investments are heavy, and that's not going to change anytime soon. Disney thinks the service can be cash flow-positive by the end of fiscal 2024, but it's going to mean a less profitable Disney until it turns that long corner. 

We also can't just evaluate Disney+ in a vacuum. Disney's popularity is slurping attention away from its more profitable segments. Movies that used to thrive at the local multiplex are now either going directly to Disney+ or making the migration in short order, with brief windows of exclusivity for theatrical distribution. And time spent on Disney+ is less time spent on ABC, Disney Channel, and its majority-owned ESPN. 

Despite all of the buzz and account growth at Disney+, ESPN+, and all flavors of Hulu, the segment's mere 8% year-over-year growth in its latest quarter wasn't enough to bail out declines at the media stock's linear networks and content sales and licensing businesses. Disney+ and all of those businesses combined for a 3% decline in revenue for the fourth quarter. The business saw a sharp decline in operating profit for the quarter and all of fiscal 2022. 

This doesn't mean Disney+ is a colossal blunder. Disney has the undisputed top content catalog in the planet, and it was right to disrupt itself before someone else did the deed. However, with the stock losing woefully to the market over the past three years -- even with its theme parks back to pre-pandemic form -- Disney+ deserves a fair amount of the blame for falling short.

Disney+ wasn't the savior Disney needed. Don't let the plus at the end of its name fool you.