Disney Posts First Streaming Profits Ahead Of Schedule Thanks To ESPN, Disney Plus And Hulu Still Struggling
In a shift from past expectations, Disney was able to exceed its streaming profits ahead of schedule. This brings the House of Mouse to a healthy profit margin with its assets.
What Triggered the Jump in Profits?
While analysts were initially forecasting a profitable turn for its streaming services by the fourth quarter of the 2024 fiscal year, in a sharp turnaround from a $512 million loss the previous year, Disney reported a $47 million in direct-to-consumer (DTC) operating income for Q3.
All of this happened despite Disney+ and Hulu incurring a combined loss of $19 million on $5.8 billion in revenue. However, ESPN+ played a crucial role in offsetting these losses. The outlook for Disney+ and Hulu is optimistic, with profitability expected in the current September quarter, which comes right after the company has begun offering a bundle that combines Hulu, Max, and Disney + for $29.99 without ads.
Subscriber Counts & Inside Out 2 Success
Disney+ concluded the quarter with 118.3 million core subscribers. This marks a slight increase from 117.6 million the previous year. Hulu saw its SVOD subscriber base grow to 46.7 million from 45.8 million. Finally, there was a growth of 4.4 million subscribers for Hulu + Live TV.
While these aren’t astounding numbers, the margins add up.
The blockbuster Inside Out 2, which premiered on June 14, played an important role in Disney’s quarterly success. The film not only became the highest-grossing animated film of all time with $1.56 billion in global box office revenue, but also spurred 1.3 million new signups for Disney+, which is likely tied to families looking to watch the original 2015 film.
The success of Inside Out 2 significantly boosted Disney’s content and licensing profits. This in turn tripled earnings in the entertainment segment to $1.2 billion, up from $408 million.
Overall, Disney’s total revenue increased by 4% to $23.1 billion, with operating income rising 19% to $4.2 billion. This growth prompted Disney to raise its full-year EPS growth forecast, reflecting improved financials. Sales rose across all three of Disney’s operating segments: entertainment, sports, and experiences, by 4%, 5%, and 2%, respectively.
Iger’s Bet
“This was a strong quarter for Disney, driven by excellent results in our entertainment segment, both at the box office and DTC, as we achieved profitability across our combined streaming for the first time, and ahead of our previous guidance,” stated CEO Bob Iger. “We are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets.”
As Disney executives prepare for an analyst call, scheduled for 8:30 am ET, the company stands poised to further its financial momentum and creative resurgence.