Disney+ continues to soar with over 6 million new subscribers in the last three months, leading to a surprising profit for Walt Disney Co.'s on-demand video streaming sector, as announced by company executives on Tuesday.
This positive financial outcome follows a challenging period for the House of Mouse. Earlier in 2023, CEO Bob Iger revealed plans to cut 7,000 jobs across the organization as part of a larger effort to reduce expenses and bring stability to the company.
Simultaneously, Disney became entangled in a heated political dispute with Florida Governor Ron DeSantis regarding the governance of a section of land in Orlando earmarked for the company's expansion.
Disney's Streaming Business Turns Profitable
The company's direct-to-consumer division, encompassing Disney+ and Hulu, reported a $47 million profit for the quarter, marking a significant improvement from the $587 million loss in the same period last year. Revenue also experienced strong growth, increasing by 13% to $5.64 billion.
"A surprising turn of events occurred in the realm of streaming today, with profits exceeding expectations during the Hollywood strike," stated Thomas Monteiro, a senior analyst at Investing.com. "This success suggests that a more global, low-cost production model similar to Netflix may be the way forward for the industry, prompting a need for a reevaluation of growth strategies."
Disney+ subscriptions saw a 6% increase to 117 million in March, while Hulu subscriptions also grew by 1% to 50 million.
"Our company's overall performance reflects the positive outcomes of the growth initiatives we implemented last year," commented CEO Bob Iger in a press release.
Despite challenges faced by entertainment giants like NBCUniversal, Warner Bros. Discovery, and Paramount Global in profiting from streaming due to high content production costs, Disney aims to sustain its streaming momentum while managing expenses efficiently, a priority for Iger since his return to Disney in 2022.
Disney+ to Expand Sports Content Offering
According to Disney officials, the 2024 Women's NCAA basketball tournament was a major success for ESPN, drawing in a significant viewership. However, even with nearly 19 million viewers tuning in to watch the championship finale between South Carolina and Iowa, ESPN still faced financial challenges this quarter.
Disney's ESPN experienced a 9% decline in profit during the second quarter, dropping to $780 million from $858 million the previous year. Despite the decrease in profit, revenue saw a 4% increase, reaching $3.8 billion. Disney attributed the profit loss to higher production expenses incurred when airing an additional college football championship game.
To enhance ESPN's revenue, Disney announced that a selection of content from ESPN+ will be integrated into the Disney+ platform later this year. This move aims to attract casual sports fans with snippets of live sports events and limited sports news.
Theme Parks Thriving Amid Challenges
Disney executives addressed the challenges faced by the company's theme parks, including rising costs due to inflation. In the United States, the impact of increased costs has been partially offset by higher guest spending resulting from elevated ticket prices and hotel room rates.
Meanwhile, Hong Kong Disneyland saw positive results with the introduction of World of Frozen, a new section featuring attractions inspired by the popular "Frozen" movies, which opened in November.
