The entertainment giant on Thursday reported 103.6 million Disney+ customers at the end of last quarter, shy of the 110.3 million projected in the Bloomberg Consensus. The shares fell as much as 5.4% in New York trading Friday, the biggest decline since June 24.

The results marked a rare stumble for Disney+, which has enjoyed explosive growth over the past year and a half, elating investors along the way. After its launch in November 2019, the service quickly became a formidable rival to Netflix Inc. and provided a contrast to pandemic-fueled declines in other Disney businesses.

But in recent months, a lack of new programming made it harder for Disney to lure as many subscribers as hoped. Production delays caused by COVID-19 have taken a toll on the company, along with other streaming services. Netflix also posted disappointing subscriber numbers last quarter, citing a dearth of programming.

“We met the expectations that we’ve set for ourselves,” Chief Executive Officer Bob Chapek said on Bloomberg Television. “We added 30 million subscribers in the first two quarters. We’re happy with where we ended up and think we have a great road paved to the guidance we gave in December” of as many as 260 million subscribers globally by the end of 2024.

Disney also announced new deals with Major League Baseball and Spain’s LaLiga soccer league, the latest in a series of sports-programming deals by the media giant.

Quarterly profit came in ahead of Wall Street projections. Excluding some items, Disney’s earnings rose to 79 cents a share, compared with a 32-cent average estimate. But sales fell to $15.6 billion, missing estimates of $15.9 billion for the period ended April 3.

The company’s streaming revenue per subscriber also declined last quarter, falling 29% to $3.99 a month due to the launch of a less-expensive service in India.

Traditional TV

Disney’s traditional TV business, meanwhile, posted a profit of $2.85 billion —a 15% increase from the same period last year. Higher affiliate fees and lower programming costs countered a drop in advertising. But the company also said operating income in the division will shrink this quarter because of a $1.2 billion increase in programming and production costs at ESPN.

With Disney’s parks now reopened everywhere but Paris, that unit, a lucrative one in good times, will be more of a focus for investors. The business lost $406 million in the quarter.

The U.S. government’s decision Thursday to relax masking guidelines could hasten the turnaround for the division.

“We think it’s going to make for a much more comfortable experience this summer in the heat and humidity of Walt Disney World in Orlando,” Chapek said.

The movie studio generated $312 million in profit, in a quarter where the company’s newest animated film, “Raya and the Last Dragon,” was released online to Disney+ customers for an additional $30 fee, as well as in theaters. Two other pictures, “Black Widow” and “Jungle Cruise,” will have similar hybrid releases in July.

But Disney is getting back to exclusive theatrical releases—its strength before the pandemic. “Free Guy” and “Shang-Chi and the Legend of the Ten Rings” will both play in theaters for 45 days before going online, Chapek said.

Shorter window

Theater chains have been eagerly waiting for big studios to embrace cinemas again, and they’ve had to make some compromises. The 45-day window is still far shorter than the three months that theaters used to enjoy.

Disney shares fell as low as $168.78 Friday, their lowest price since Feb. 1. The shares were down 1.6% this year through the close Thursday in New York.

Even with the shortfall in new subscribers, Disney+ has been “way more successful than anyone thought,” said Markus Hansen, an analyst at Vontobel Quality Growth.

What Bloomberg Intelligence says

“The streaming user shortfall … at Disney+ is a glitch in the grand scheme of Disney’s overall investment thesis that will bring back the focus to the company’s legacy businesses, notably its theme parks and film studios. … Disney’s parks can rebound quickly on pent-up demand, an easing of COVID-19 mandates and pandemic-induced cost efficiencies.”

–Geetha Ranganathan, media analyst

And its expansion globally remains in its early stages. Disney+ is set to launch in Malaysia on June 1 and Thailand on June 30. A Star+-branded Latin American service is due Aug. 31.

“Disney still has room to run,” Hansen said.

Disney also said that subscriptions picked up in the latter part of the quarter and that it’s nearly back to full production for film and TV. More Marvel and Star Wars shows are coming, building on the success of “WandaVision,” “The Mandalorian” and “The Falcon and the Winter Soldier.”

“We’re spending a lot of money across our variety of franchises in order to create the content that’s going to keep consumers coming back,” Chapek said on a conference call with investors. That will drive subscriptions and improve “our engagement growing across all of our platforms.”