Disney+, Hulu & ESPN+ Become Profitable For First Time
Disney has announced its latest quarterly financial results, and it was revealed that for the very first time, Disney’s streaming services, which include Disney+, Hulu and ESPN+, have become profitable and one quarter ahead of Disney’s previous guidance of achieving profitability.
Way back in 2019, prior to the launch of Disney+, the company stated that the streaming service would not hit profitability until the end of 2024, which has been a major target for the company, especially over the last few years.
The focus on making Disney+ and its entire streaming division profitable hasn’t been easy, as it initially had to try to catch up with Netflix’s huge subscriber numbers, resulting in lots of discounts and billions of dollars spent on new original content.
However, the initial boost of subscribers during the pandemic resulted in a false sense of security, with Wall Street wanting the businesses to become profitable rather than just spending billions chasing subscribers.
This resulted in a huge shift within Disney, and other studios. The return of Bob Iger as CEO resulted in mass layoffs of thousands of staff and the output of new content drastically reduced, the introduction of the ad-supported tier plus lots of price rises. Only this week, Disney announced another price rise is coming in October, highlighting that just making profit in one quarter isn’t enough, it needs to be consistant.
Disney CEO Bob Iger said in a statement regarding the streaming division hitting profitability for the first time:
“Our performance in Q3 demonstrates the progress we’ve made against our four strategic priorities across our creative studios, streaming, sports, and Experiences businesses,. This was a strong quarter for Disney, driven by excellent results in our Entertainment segment both at the box office and in DTC, as we achieved profitability across our combined streaming businesses for the first time and a quarter ahead of our previous guidance. Despite softer third quarter performance in our Experiences segment, adjusted EPS for the company was up 35%, and with our complementary and balanced portfolio of businesses, we are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets.”
In the latest quarter, Disney’s Direct To Consumer division, which includes Hulu, Disney+ and ESPN+ brought in $5,805 billion, which was up 15% on the last quarter.
According to Disney, the reason for the increase was down to subscription revenue growth attributable to higher rates due to increases in retail pricing and subscriber growth at Disney+ Core and, to a lesser extent, Hulu, partially offset by an unfavorable foreign exchange impact.
Disney has been making efforts across the board to making the division more profitable, increasing the price, increasing the amount of advertising revenue and reducing costs, which will now mean the division can move into the next stage of building the business to make money rather than operating at a loss, which has impacted on the company for years, but in the long run is where the company knows it needs to focus.
A new chart from the quarterly financial reports highlight how over the past two years, Disney’s streaming division has gone from losing over $1.5 billion a quarter, to now making a profit.
Roger’s Take: It’s taken a long time, but it’s finally gotten there, but at what costs? Building out its streaming division costs billions of dollars, and it’s going to take a long time to get that back, but in the long run, it’s what the company needs to do. Unfortunately, subscribers are now having to pay the price, not just with the price rises but also with less content being released.
What do you think of Disney’s streaming services becoming profitable? Let me know on social media!
Roger Palmer
Related Article
Disney+ To Reduce Pan-Nordic Commissioning Of Original Programming
Disney+ To Launch Ad-Supported Tier In More European Countries