Disney Shares Drop Sharply After Big Subscriber Miss

Anyone who thought Netflix's recent slowdown in subscriber growth could open up a path for Disney to make some headway in the streaming war should think again. All eyes were on Disney Plus during Thursday's earnings call, and the streaming service badly underperformed Wall Street estimates for quarterly subscriber growth.


Disney Plus now counts 103.6 million subscribers as of April 3, about 5 million fewer than consensus analyst expectations.

The service surpassed the 100-million-subscriber mark in March, just 16 months after its November 2019 launch – a milestone that took Netflix ten years to achieve. With Disney's lucrative Parks division continuing to suffer from the pandemic, so far results from the company's big bet on streaming have kept its business outlook buoyed. Yet with rapid growth comes great expectations, and in the immediate aftermath of Disney's reported shortfall on Thursday, the company's stock fell as much as 4.5% in after-hours trading.

Nevertheless, chief executive Bob Chapek said the service remains on track to reach between 230 and 260 million subscribers by 2024, as the company forecasted in March.

Analysts had been bullish that the two Marvel series debuting this quarter – "WandaVision" and "Falcon and the Winter Soldier" – would boost demand. Evidently the appeal of Marvel's expansive foray into streaming television did not quite materialize.

Disney also missed consensus revenue expectations, coming about $300 million below the consensus $15.6 billion.

Despite the misses, Chapek said he was "extremely pleased" with how customers responded to Disney Plus's price increase. Hikes in March in the U.S. did not significantly increase churn, he added.

Brett Feldman of Goldman Sachs said in his most recent investor note that a positive consumer response to the service's first-ever price increase would bode well for its long-term growth and profitability prospects. Disney has said it hopes Disney Plus will begin turning a profit in 2024.

And Brandon Nispel, equity research analyst at KeyBanc Capital Markets, wrote in his earnings preview that "profits in streaming will be dominated by a select few," and suggested that Disney is well positioned to be one of those winners. That the service — especially in such a competitive market — can retain customers despite hiking prices is a strong sign of durability.

Disney shares have been trading relatively flat of late, following an extended recovery from its pandemic plummet. By the first Monday after lockdown in March 2020, the stock had fallen over 40% to $86 from its November 2019 then all-time high of $150. It reached a new all-time high by March 2021, surpassing $200, before settling into a stagnant hover between $180 and $190 over the last month, closing at $178 on Thursday.

Investors were hoping for a positive earnings report to help break through that inertia, but instead saw the ticker going the wrong direction, at least for now.

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Three Black creators are offering NFTs tied to holograms of themselves performing the iconic dance moves they pioneered that spread through social media and sparked discussion over how to compensate digital performers.

The "Renegade" took social media by storm in 2020. TikTok's biggest stars and millions of others uploaded videos of themselves performing the dance. But the routine's then-14-year-old creator, Jalaiah Harmon, told the New York Times she didn't get credit for the dance nor any income that could have come with it. Later her viral dance became a Fortnite emote that players could buy for their characters to perform, but any licensing arrangement made with Harmon was not made public.

As of today, Harmon's dance, along with Cookie Kawaii's "Throw it Back" and Blanco Brown's "The Git Up," have collectively been viewed on TikTok over 10 billion times, but monetizing their creations has been challenging.

Working with La Cañada-based AR production house Jadu, and their Culver City-based studio partner Metastage, the three creators have each made a hologram of themselves performing their dances. These will be sold at auction as NFTs on Juneteenth on NFT marketplace OpenSea,.

One NFT has been minted for each of the three holograms. The creators will receive a majority percentage of the auction sale, along with a percentage of any secondary sales. Jadu will receive minority percentages.

Black creators not getting properly compensated has sparked controversy over how to properly give credit in the fragmented, copycat world of user-generated media. NFTs present one way forward, and doing so was a big motive for Jadu.

NFTs allow creators to retain an ongoing stake in a digital asset. Smart contracts can automatically reroute a percentage of any secondary sale to a creator's account.

"We were really looking to find artists that have been either overlooked or have not received the appropriate cultural and financial compensation," said Jadu chief operating officer Jake Sally. "Everyone should know who Jalaiah, Blanco Brown, and Cookie Kawaii are."

The three holograms will be available for use on the Jadu app, which allows users to interact with holographic celebrities and create free videos that can be shared across social media. Owners of the three NFTs will be displayed on the app.

Sally said enabling people to use these holograms should help the value of their associated NFTs increase over time – value that the creators can capture through their perpetual stake in any secondary sales.

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