It’s very clear for a while that streaming is a high-investment game and those costs only continue to grow over time. Netflix still has showcased that this model doesn’t always promise instant wins as expectations on all sides continue to grow to hope to be the one that draws in the biggest crowd. In Disney’s latest earnings call, it was highlighted that Disney’s streaming losses have continued to grow to $1.47 billion even as it added an impressive 12.1M subscribers in the last quarter.
Overall, Disney is doing well in the streaming market by hitting 235M subscribers overall, as Hulu added one million and ESPN+ another 1.5M. Ms. Marvel, interestingly enough, was highlighted as one of the shows that gave Disney+’s growth a boost, which is interesting considering it had a lower viewing count when compared to others in the franchise. It once again may highlight the importance of Disney diversifying its portfolio to draw in viewers, especially a younger generation.
The biggest concern lies in how Disney has doubled its year-over-year investment, which will have investors and shareholders uncertain about the potential of this market. CEO Bob Chapek hinted that these costs have now peaked and profitability would start in 2023.
The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally, and we expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate. By realigning our costs and realizing the benefits of price increases and our Disney+ ad-supported tier coming December 8, we believe we will be on the path to achieve a profitable streaming business that will drive continued growth and generate shareholder value long into the future.
Bob Chapek
There’s a lot of hope in the new ad-tier version of these Disney bundles to make that profitability possible especially as they also have a price increase planned. If they manage to accomplish this task, the world may take another look at the streaming market’s longevity. The Wrap considers it a signal of “streaming fatigue” but that’s difficult to truly say at this point even with minor signs potentially steering it in that direction. At this point, the first promise of profitability is crucial for Disney to prove their investment was truly worth it. Overall Disney has a revenue of $20.1 billion in its quarter with an operating income of $1.6M.
