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Disney Stock Surges On Q3 Earnings Beat, Disney+ Subscriber Total Overtakes Netflix

Disney added more than 14 million new users to its flagship streaming service over the June quarter, taking its overall total to 221 million and overtaking Netflix as the world's biggest platform.

Updated at 4:49 pm EST

Walt Disney  (DIS)   posted stronger-than-expected third quarter earnings Wednesday, while adding more than 14 million new subscribers to its Disney+ streaming service, while unveiling new base price levels for its upcoming ad-supported platform.

Disney said adjusted diluted earnings for the three months ending in June, the group's fiscal third quarter, came in at $1.09 per share, up 36.25% from the same period last year and firmly ahead of the Street forecast of 97 cents per share.

Group revenues, Disney said, rose 26% to $21.5 billion, topping Street forecasts, while overall subscriber totals for its Disney+ hit 152.1 million, topping analysts' estimates by around 3 million.

Disney added 14.4 million subscribers over the whole of the quarter, with ESPN+ totaling 22.8 million paid subscribers and Hulu rising to 46.2 million. Disney's total subs of 221.1 million are now narrowly ahead of the 220.67 million last tallied by Netflix  (NFLX) .

Parks and Experiences revenues came in at $7.4 billion, topping the Street's estimate and rising more than 70% from last year as visitors returned to re-open resorts and cruises around the world, particularly in Hong Kong and the United States. 

“We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership, and significant subscriber growth at our streaming services," said CEO Bob Chapek. "With 14.4 million Disney+ subscribers added in the fiscal third quarter, we now have 221 million total subscriptions across our streaming offerings.”  

“We continue to transform entertainment as we near our second century, with compelling new storytelling across our many platforms and unique immersive physical experiences that exceed guest expectations, all of which are reflected in our strong operating results this quarter,” he added.  

Walt Disney shares were marked 4.7% higher in extended hours trading immediately following the earnings release to indicate a Thursday opening bell price of $117.87 each.

Last month, Disney also said it had secured a record $9 billion in ad spending commitments for its coming fiscal year. Known as "up fronts", the advertising purchases suggest faith in both the group's expanding digital platforms, including ESPN and Hulu, as well as its plans to introduce a tiered service for its Disney+ streaming platform.

The service, which will launch in December, will be priced at $7.99 per user. Disney+ prices will also rise by around 35% to $10.99 per user. 

Netflix, for its part, has lost more than 1.1 million subscribers over the six months ending in June, thanks in part to rising prices, increasing competition and password sharing.

To combat that exodus, Netflix also plans to launch an ad-supported streaming services, priced at a discount to its traditional offering, and noted that it's in the "early stages" of rolling out a global plan that will prevent password-sharing.

An ad-support plan could bring in an additional 4.3 million subscribers in the U.S. and Canada, Netflix analyst John Blackledge from Cowen estimated last month, helping its global total rise to around 240 million by the end of next year.

"We’ll likely start in a handful of markets where advertising spend is significant," Netflix said. "Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering."

Reports also suggest Disney has been in talks with Walmart  (WMT)  aimed at adding its streaming services into the retail giant's monthly $12.95 membership offering.

The New York Times said Walmart has also held discussions with media rivals Comcast  (CMCSA) , which owns the Peakcock streaming service, as well as Paramount Global  (PARA) , which operates Paramount+ and Showtime.