Coming off its first-ever quarterly subscriber loss, Disney+ will be under the microscope when The Walt Disney Company and CEO Bob Iger report Q2 2023 earnings tomorrow. But that isn’t the only obstacle facing the Magic Kingdom in 2023 and beyond.

Disney must continue boosting the ad-supported tier of Disney+ to reignite subscription growth and alternative revenue sources, wrestle with disappointed Disney+ Hotstar users in the high-upside Asia Pacific region and determine a future course of action with Hulu. At the same time, it must further re-establish strong theatrical windows to maximize revenue, stave off the ongoing decline of linear television and hope the ongoing writer’s strike ends before impacting its content pipeline following massive disruption from the early pandemic. No one ever said Hollywood was easy.

Overall, it remains to be seen just how far family-friendly franchise power can take Disney+ without the aid of more expansive programming. The service lost 2.4 million global subscribers last quarter while growth in US and Canada has largely plateaued. On the bright side, however, is the fact that Disney owns 23 of the 25 most in-demand series on Disney+ in Q1 ’23, representing an advantage over rivals both in original development and prospective licensing opportunities moving forward. Conversely, less than 10 of the 25 most in-demand series on Hulu last quarter were owned in-house, adding another layer to the debate between keeping or selling the US based streamer.

Corporate Demand Share: Q1 2023

• Corporate demand share can assess which companies have the most valuable content to license. This analysis can effectively help value a conglomerate’s legacy and library content in aggregate.
• The Walt Disney Company once again leads the industry at 20.0%, reflecting a deep library of resonant content across its linear and streaming portfolios.
• However, any hypothetical future mergers and/or acquisitions involving Warner Bros. Discovery (17.2%), Paramount Global (12.5%) and NBCUniversal (10.0%) would likely result in the new corporate entity leapfrogging Disney for first place.

Streaming Originals Demand Share: Global, Q1 2023

• In Q1 ’23, Disney+ accounted for a 9.4% global audience share for streaming originals, good for third place behind Amazon Prime Video (10.8%) and Netflix (37.9%). However, this marks a 0.4% decline from Disney+’s 2022 full year share (9.8%) and a 0.8% decline from Q1 ’23 (10.2%).
• The decline may have been partially due to the slightly smaller than expected reception to Season 3 of flagship series The Mandalorian, which was still a whopping 89.90x more in demand than the average series worldwide from when it premiered on March 1 to when it aired its season finale on April 19. While this lands it among the top 0.2% of all TV titles in that span, it marks just a 9% increase from Season 2 (82.52x) and a 24% dip from Season 1 (118.86x). This may be partially due to the fact that Season 3 premiered 27 months after Season 2 concluded.
• Disney+ Hotstar — which operates in India, Malaysia, Thailand, Indonesia and Vietnam and accounts for an estimated 57.5 million subscribers — lost more than 3 million customers after losing digital rights to cricket league IPL last summer and has now lost HBO content as well. This comes just as Succession is airing its final season and HBO has announced a TV reboot of the Harry Potter franchise and new entries in the Game of Thrones universe. Since Disney+ Hotstar accounts for nearly 36% of the streamer’s global subscriber count, it’s worth monitoring whether additional losses are in the company’s future.
• Despite the overall decline, Disney+ is still the fastest-growing streamer in global demand for streaming originals since launch as it has increased its share from 3.6% in 2020 to 9.4% as of Q1 ’23 and even hitting double digits last quarter.
• Moving forward, the question will be if Disney+ can leapfrog Amazon for second place with the looming release of new originals such as The Muppets Mayhem, Loki Season 2, X-Men ’97, Marvel’s What If? Season 2 and Secret Invasion.

Total Catalog Demand Share: US, Q1 2023

• While demand for original content drives subscription growth, library content is key for customer retention, an increasingly crucial element of all streaming strategies as the market matures and consumers are offered more choice and easier ways to cancel than ever.
• The total catalog demand share data is a good indicator of which SVODs consumers are most likely to use as a default ‘streaming home,’ accounting for all TV series and movies available on a platform.
• As of Q 1 ’23, Hulu is second in Total Catalog Demand with 15.8% and Disney+ is fifth at 9.4%. Combined, the two services would easily overtake Netflix (17.9%) as the top overall streaming destination.
• It’s also worth noting that despite a smaller movie library than many of its rival streamers, Disney+ is tied for third in total movie demand (5.7%) behind just Netflix (7.4%) and HBO Max (8.2%). This speaks to the power of Disney’s established brands such as Marvel, Star Wars and Pixar. We can expect the looming arrival of hit blockbuster Avatar: The Way of Water to also generate immediate interest in the streamer’s film catalog.

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