Disney's direct-to-consumer unit lost $1.5 billion this past quarter, but the company saw the total number of streaming subscribers rise to over 235 million.
Disney+ alone, its flagship streaming service, added 12 million new subscribers, according to the company's latest quarterly results. Two other platforms in Disney's streaming portfolio, ESPN+ and Hulu, added 1.9 million and 1 million new subscribers, respectively.
This brings the total number of subscribers to Disney's streaming services to 235 million. In comparison, Netflix reported that it had 223 million subscribers last month after it reversed the decline in account numbers and added 2.4 million new customers in the quarter.
While Disney beat investor expectations regarding subscriber numbers, it fell short in terms of the financial outlook. Its streaming division witnessed a loss of $1.5 billion in the last quarter, up from $630 million in losses during the same period last year.
The company said this was a direct result of a "strategic" decision to invest heavily in its Disney+ content and the global expansion of its streaming service. Disney said it expected to narrow its direct-to-consumer operating losses.
"Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate," Disney's CEO Bob Chapek said in a statement.
Disney's focus on its streaming services saw the company's overall revenue and profit increase less than projected in the last quarter. The revenue was up by 9% when compared to the previous year, reaching $20.1 billion. At $162 million, the profit was 1% higher.
The financial results saw Disney's shares plunge in after-hours trading by as much as 10%. The company promised that "peak losses" were now behind it and that its streaming business was at a turning point.
It is true for the rest of the streaming industry, which can no longer rely on growing subscriber numbers to remain profitable and competitive. Netflix has already launched a lower-priced ad-supported subscription plan, and Disney will do the same in December. Both have increased prices for ad-free plans.
"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," Chapek said.
Disney also has a booming theme parks and resorts business, which funds its streaming expenses and saw "record" results in 2022, according to the company.
Its Parks, Experiences and Products division earned $1.5 billion in profits – double the number last year – despite the closure of Disneyland in Shanghai and weather-related disruptions in Florida. The unit's total revenue was $7.6 billion, a 36% increase compared to 2021.
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