NEW YORK, May 12 — Walt Disney Co DIS.N eased concerns about streaming video by picking up 7.9 million new Disney+ customers from January through March, sending shares of the entertainment giant up 3.5 per cent in after-hours trading on Wednesday.

Wall Street had been expecting 5.3 million new Disney+ customers. Disney still has a long way to go to hit ambitious, multi-year targets, but the growth was a riposte to Netflix shrinking.

Disney needs to average nearly 9.1 million new customers per quarter to reach the low end of its goal of adding 230 million to 260 million Disney+ subscribers by the end of September 2024.

The world’s largest entertainment company has staked its future on building a streaming TV business to rival Netflix Inc NFLX.O, the company that first drew mass audiences to subscription video.

Netflix unnerved Wall Street last month when the company disclosed it lost subscribers in the first three months of 2022 and forecast more defections through June.

The Netflix results hit media stocks and prompted investors to re-evaluate their expectations for online video.

Total subscriptions for Disney+, launched in November 2019, reached 137.7 million, with help from new releases including Marvel’s Moon Knight series and Pixar movie Turning Red.

“In spite of less-than-optimal results overall, because of the positive streaming numbers, Disney will do well,” said Shahid Khan, partner at Arthur D. Little, a technology and management consulting firm. “As households rationalize their streaming choices, given the inflation, Disney+ will become one of the top choices and will become a real threat to Netflix.”

Disney reported adjusted earnings per share of US$1.08, below analyst forecasts of US$1.19, according to IBES data from Refinitiv, impacted by an increase in the effective tax rate on foreign earnings.

Revenue came in at US$19.2 billion (RM84 billion), below the US$20.03 billion consensus estimate.

Disney’s theme park business continued a strong rebound after extended pandemic-related closures and attendance restrictions.

Operating income at the parks unit totaled US$3.7 billion, a 50 per cent increase from a year earlier. — Reuters