The race for subscribers makes Disney + lose money
Streaming with Disney+ now has more than 164.2 million subscribers, up 12 million from the end of June, far more than the market expected, according to a quarterly earnings release on Tuesday, November 8.
On the other hand, Disney+, ESPN+ and Hulu more than doubled their operating losses year-on-year to $1.47 billion for the July-September period.
The U.S. giant promised that the losses would shrink. “They will begin to decrease during the current quarter,” promised Bob Chapek, the company’s boss, during the conference call with analysts.
Bob Chapek also assured that Disney+ would reach profitability in 2024.
Disney+ will launch a new ad-supported subscription on Dec. 8 for $7.99 a month, while its essential ad-free subscription will increase to $10.99 in the U.S.
Like Netflix, which is launching a similar plan this month, Disney+ hopes to attract even more viewers but also to diversify its revenue streams.
The Disney boss also mentioned summarily budget cuts, especially in marketing expenses, and the possibility of further price increases.
“Our history shows that rate increases … have not translated into significant increases in terminations. So we think we still have room to grow,” he said.
Disney+ can and does feel good about itself because the movie Hocus Pocus 2, released on Sept. 30, is a hit – “the most-viewed premiere in the history” of the platform, Bob Chapek said – and Andor, a TV series rooted in the popular Star Wars universe.
“But subscriber growth will not be linear each quarter,” said Christine McCarthy, the group’s chief financial officer.
Disney+ expects subscriber growth to slow and paid user growth to be low during the holiday season.
The El Dorado of the 2010s and the pandemic is behind us, and it will have to reinvent itself like Netflix. This industry veteran had a rough first half of the year, losing nearly 1.2 million subscribers, before recovering in the summer of 2022.
According to Insider Intelligence figures, Disney+ executives are confident of surpassing 108 million U.S. viewers by the end of the year.
This will put Disney+ on track to capture more than 45% of U.S. streaming service users, behind YouTube, Netflix, Amazon and Hulu (owned by Disney).
In all, Disney was disappointed with revenues of 20.1 billion USD and profits of 162 million, up on a year but below expectations.
Disney shares lost about 6% in electronic trading after the close of the stock market on Tuesday, November 8 – the market expected revenues of USD 21.27 billion and a net income of USD 797 million.
On the other hand, its “theme parks, experiences and merchandising” division generated 7.4 billion in revenues, up 36% year-on-year, in the fourth quarter of its fiscal year.
A “record” result, said Bob Chapek during the conference of analysts.
The entertainment giant is benefiting from the pandemic’s exit and consumers’ appetite for travel and outings after a long period of health restrictions related to COVID-19.