Disney+ Losses 4 Million Subscribers But Revenue Still Soars 20%

The fiscal second-quarter earnings report of The Walt Disney Company was released on Wednesday, surpassing Wall Street expectations across various important measures, including revenue.

Similar to other prominent players in the entertainment industry, the profitability of streaming services remains a closely monitored metric. Disney’s direct-to-consumer business experienced a decrease in losses, with the figure dropping to $659 million during the quarter. This marks a decline from the previous quarter’s $1.1 billion and also signifies a significant improvement from the peak loss of $1.5 billion reported in the last earnings release under the leadership of former CEO Bob Chapek.

In recent streaming updates, the total number of Disney+ subscribers saw a slight decline, settling at 157.8 million, compared to the previous quarter’s 161.8 million. However, the majority of the decline was observed in Disney+ Hotstar, with domestic Disney+ subscriptions only decreasing by 300,000. This was somewhat unexpected considering the recent price increase that would have affected most consumers during the previous quarter.

Interestingly, the average revenue per user (ARPU) experienced significant growth at Disney+. For domestic users, ARPU surged by 20 percent year over year, while internationally (excluding Hotstar), it increased by 6 percent.

The streaming division’s revenues showed a notable increase, reaching $5.5 billion, reflecting a 12 percent growth rate.

Overall, Disney’s total revenues for the quarter amounted to $21.8 billion, marking a 10 percent increase compared to the previous year. However, the segment operating income witnessed a decline of 11 percent, settling at $3.3 billion, primarily due to ongoing challenges in the linear TV business. The revenue from linear networks experienced a 7 percent decline year over year, totaling $6.6 billion, while operating income in this division decreased by 35 percent to $1.8 billion.

The decline in income can be attributed to higher sports rights and production costs at ESPN, coupled with reduced affiliate and advertising revenue in the cable sector. Similarly, ABC and its stations faced lower advertising revenue, aligning with the industry-wide trend.

Shifting the focus back to streaming, Hulu’s subscriber count remained relatively stable, with the ad-supported SVOD tier gaining 200,000 subscribers and the live TV tier losing 100,000 subscribers. ESPN+ witnessed a growth of 400,000 subscribers. While Hulu’s ARPU experienced a slight decline due to reduced ad revenue, ESPN+ saw a slight increase in ARPU thanks to higher ad revenue.

In contrast, Disney’s theme parks business continued its exponential growth, with international parks’ revenue surging by over 100 percent to $1.2 billion, driven by the lifting of COVID-19 restrictions. Domestic parks also saw a healthy 14 percent increase in revenue, amounting to $5.6 billion.

These earnings come at a time when Disney, under the leadership of Bob Iger, is actively working to streamline costs and achieve profitability in the streaming sector. This includes the implementation of a new organizational structure, as well as job reductions, with approximately 7,000 positions eliminated across the company. To date, two rounds of layoffs have resulted in the loss of around 4,000 jobs, and a third round is scheduled to commence before summer.

Disney reported severance costs of $152 million during this quarter as a result of these workforce changes.

About Post Author

In 2013, Skyler Shuler wanted to share his knowledge of Disney films and the magic behind the scenes. So, he created the Instagram account Disney Film Facts and the page quickly garnered a following. Soon after a Twitter was created, and not long after that DisneyFilmFacts.com was born. The page has been lucky enough to garner a wonderful following of such amazing Disney and movie fans, as well as been sourced in some of the biggest entertainment sites in the world. In 2018, the page was rebranded to The DisInsider, and the rest was history!

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