Disney+ Subscriber Growth Slows Down

Subscriber growth at Walt Disney Co. DIS -4.17% ’s flagship streaming service has slowed in the current quarter, Chief Executive Bob Chapek said Tuesday, a development that sent company shares falling in midday trading.

Investors should expect a subscriber increase in the “low single-digit millions” for Disney+ after the service encountered headwinds, Mr. Chapek said. In the company’s most recent quarter, Disney+ subscriber numbers beat estimates when the service added more than 12 million subscribers, reaching 116 million.

Shares in Disney fell more than 5% soon after Mr. Chapek’s comments, which were delivered at an investor conference held by Goldman Sachs Group Inc. The stock closed down 4.2%, or $7.44, at $171.17.

Wall Street’s quick response to any bad news concerning Disney+ signals how crucial investors see the streaming service to the company’s overall future. Not even two years old, Disney+ has emerged as a bright spot—and stock-price savior—after more than a year of movie-theater and theme-park closures brought on by the Covid-19 pandemic.

Mr. Chapek cautioned investors not to expect subscriber growth to be a steady march from quarter to quarter. At competing services, growth has slowed as consumers take advantage of the reopening economy or cut back on the number of services to which they subscribe.

Consumer adoption and retention of Disney+ has come in fits and starts, he said, describing the trends as “noisier” than some might have initially expected.

To keep subscribers hooked and bring on new ones, Disney has dozens of movies and television shows in production for the service, Mr. Chapek said. Over the next year, the company will continue to expand to new markets overseas that don’t yet have access to Disney+.

With theaters closed this past year, Disney+ has served as a distribution platform for would-be theatrical releases, an option Mr. Chapek said the company will continue to retain even as the pandemic ebbs. The only business plan “locked in,” he said, was flexibility.

That flexibility has come at some cost. Disney is currently embroiled in a public spat with actress Scarlett Johansson, who sued the company earlier this year, claiming that the simultaneous release of her movie “Black Widow” in theaters and on the service breached her contract.

With more films being released direct to streaming services, stars like Scarlett Johansson are asking for a bigger cut of the at-home, early access profits for movies like Marvel’s “Black Widow.” Here’s a look at how streaming is changing film distribution in Hollywood and what that could mean for how actors get paid.

Mr. Chapek didn’t address the suit directly, but said such talent deals are trapped in a middle ground where contracts were written in a pre-Covid-19 time that couldn’t anticipate the pandemic and its effects.

“The world is changing, and I think the talent deals going forward will have to reflect that the world is changing,” he said. “There’s a bit of a reset going on right now.”

Disney also said Tuesday that it plans to hold a Disney+ celebration on Nov. 12. The “Disney+ Day” will coincide with a barrage of new programming hitting the service, as well as launches in South Korea, Taiwan and Hong Kong.

Write to Erich Schwartzel at erich.schwartzel@wsj.com