Disney Plus hurdle against Netflix? Courting older users

Disney reported its Q4 earnings yesterday after the bell and in pre-market today the stock is down nearly 5% as of the time of this writing, according to Yahoo Finance. This suggests that investors weren’t happy with some of what the House of Mouse reported. But what exactly?

It’s likely Disney’s Q4 subscriber numbers for its Disney Plus streaming service were the biggest disappointment. As CNBC points out, some on Wall Street were expecting Disney Plus to add 9.4 million new subscribers in Q4. Instead, the service only added 2.1 million subscribers. But Disney CEO Bob Chapek suggested on a conference call that a slate of new shows and movies set to release in Q4 2022 could be a big driver of subscriber growth next year, and the company was still on track to reach its goal of 230 million to 260 million subscribers by 2024:

Q4 will be the first time in Disney Plus history that we plan to release original content throughout the quarter from Disney, Marvel, Star Wars, Pixar, and Nat Geo, all in one quarter. This includes highly anticipated titles such as Ms. Marvel, and Pinocchio.

Yet analysts at research firm MoffettNathanson have an interesting report out that argues that Disney’s lineup of IP, which centers around Disney classic characters, and Pixar, Marvel, and Star Wars properties, may not be enough to reach a certain group of subscribers—those living in households without young children. As the report notes:

. . . we believe that Disney Plus has generated nearly best-in-class awareness scores here in the United States, but has failed to penetrate older demographics of households 50+. Those homes might not necessarily have young kids attracted to Disney’s content or be superfans of Marvel, Pixar or Star Wars content.

As for how Disney Plus could start appealing to older users without children, MoffettNathanson says the streaming service should begin developing more “off-brand, general entertainment content” like Netflix has. The firm also says Disney should broaden its international and local-language content in order to reach a more global audience.

Of course, it needs to be noted Disney Plus has done phenomenally well since its introduction two years ago. The service currently boasts 118.1 million subscribers—up from 73.7 million a year ago. Yet if it wants such growth to continue, MoffettNathanson’s argument for more adult, general content seems sound.

The report, “Disney: ‘This is the business we’ve chosen,\’” was released on Wednesday.