Disney’s latest earnings report showed stronger-than-expected growth for Disney+, but much of that momentum came from wholesale distribution deals rather than consumers signing up on their own.
CFO Hugh Johnston told CNBC that about half of the quarter’s Disney+ subscriber additions came through partners, with the Charter Communications agreement playing the biggest role.
Charter Customers Are Counted As Paid Subscribers
Under the Charter deal, Spectrum TV Select customers automatically receive Disney+ Basic at no additional cost — meaning Disney+ is free to Charter customers.
Millions of cable customers were added to Disney+ whether they requested the service or not. Disney counts them as paid subscribers because Charter pays a wholesale rate for the entitlement, even though the end user pays nothing extra.
Lower Revenue Per User Shows the Impact
This approach boosts the headline subscriber count but doesn’t generate the same revenue as direct signups.
Disney’s own reporting treats wholesale recipients as paid subscribers as long as Disney receives compensation, which explains why domestic average revenue per user (ARPU) stayed flat at $8.09 and why international ARPU only saw a slight improvement.
Subscriber totals rose, but the financial upside was limited.
Wall Street Saw Through the Headline Numbers
Disney is using wholesale partnerships to show scale during a period when streaming growth is slowing across the industry.
It helps Disney replace the subscribers who cancel so the total number doesn’t drop.
But investors focused on the underlying reality: Disney+ still needs higher-value users to materially improve profitability.
The stock dropped nearly 10 percent after the earnings release as Wall Street reacted to weaker entertainment results, softer cash flow, and rising costs across content, sports rights, and capital projects.
The Subscriber Strategy Doesn’t Fix the Fundamentals
Disney will likely continue leaning on bundled and wholesale distribution as it positions the company for a broader streaming future, especially with ESPN’s direct-to-consumer push coming.
But the quarter makes one thing clear. Not all subscribers are equal, and wholesale deals may pad the numbers, but they don’t solve the core financial challenges facing Disney+.
