Disney+ rebounded this summer with 7 million additional subscribers since the end of June, and the entertainment giant is betting on higher quality content and cost cutting to make its streaming business profitable.
After three consecutive quarters of subscriber losses, Disney+ reassured investors with better-than-expected profits.
According to the California-based group’s quarterly results press release published on Wednesday, it now has 112.6 million subscribers, not counting the Indian version of the service, which is largely responsible for the decline.
The group’s three streaming platforms (Disney+, ESPN+ and Hulu) also significantly reduced their operating losses within a year, to $420 million for the period July to September, instead of $1.47 billion in the summer. 2022.
Bob Iger, the company’s boss, assured during a conference with analysts on Wednesday that “turning streaming into a profitable growth engine” was his priority.
Last year, the company assured that Disney+ would be profitable in 2024.
The manager welcomed Disney’s “efforts” in terms of restructuring and efficiency. “We are on track to achieve approximately $7.5 billion in cost reductions, which is $2 billion more than expected,” he said.
The Enchanted Kingdom actually cut 8,000 jobs. The historic strike in Hollywood, which paralyzed production for months, also led to savings.
In terms of content, Bob Iger promised a program that is “balanced between sequels to very popular titles and new high-quality original series and films, starting with Wish,” an animated film that will hit theaters in November.
Lack of “quality”
“When the pandemic broke out, we were in the process of significantly increasing our production. “I always thought that quantity could compromise quality and I think that’s exactly what happened,” admitted the manager.
“We are all rolling up our sleeves, myself included, (…) to produce less and focus more on quality.”
It is also betting on diversification of revenue streams – around 5.2 million subscribers subscribe to the advertising formula it launched almost a year ago – and a stricter policy on sharing passwords between users.
This method has proven successful for Netflix, but at Disney it will not bear fruit “before 2025,” the boss estimated.
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The company is also betting on a new offering that brings together Disney+ and Hulu content in the US to improve its streaming margins. This will “reduce customer acquisition costs and reduce churn,” he emphasized.
Disney, already the majority shareholder of this platform with more adult content, last week announced the purchase of the missing shares (a third of the company for $8.6 billion) from NBC Universal, a subsidiary of Comcast.
Still, Insider Intelligence analyst Paul Verna predicts possible “tensions with Comcast” over the price negotiated five years ago.
Hit
Overall, Disney posted revenue of $21.2 billion (+5% year over year) in the fourth quarter of its staggered July-September fiscal year, of which the company generated net income of $264 million. (+63%).
In mid-September, the entertainment giant announced $60 billion in investments over 10 years across its industry, including theme parks, cruises and related products.
Sales this summer rose 13% year over year to $8.2 billion.
The impact of the Hollywood strike was “negligible” for Disney, Bob Iger said on CNBC on Wednesday.
Actors and major Hollywood studios agreed on Wednesday to end the social movement, the actors’ union SAG-AFTRA said.
This strike, the worst in the industry since 1960, halted film and television production in the United States for many months and cost the American economy billions.
The situation was resolved for the writers in September, but negotiations with the actors, who left their jobs in mid-July, were only completed on Wednesday.
They called for better compensation in an industry disrupted by the rise of streaming and artificial intelligence protections.