Though Disney’s other businesses are thriving, streaming mounts financial and material losses.
Disney reported better-than-expected quarterly earnings but still grapples with low profitability and decreasing subscribers in its flagship streaming service. Still, Wall Street rejoiced at the report, with the Disney stock jumping 12.23% in intraday trading.
Earnings-per-share came in at $1.22 compared to the $0.99 expected by a Bloomberg poll. Revenues for the quarter were $23.5 billion, slightly missing the $23.8 Wall Street expectations. The company announced a dividend payable at $0.45 per share.
During his investors call, Disney CEO Bob Iger announced the 2024 strategy for the entertainment giant. Earlier this week, Disney announced a $1.5 billion investment in Epic Games, the company famous for developing the free-to-play video game Fortnite.
This would be the first real move by Disney in the video game industry, a sector worth hundreds of billions of dollars worldwide.
The company also announced the launch of an ESPN streaming service planned for 2025. ESPN is a sports streaming company owned by Disney and Hearst Communications through a joint venture.
Moreover, Iger announced an exclusive contract with Taylor Swift to stream her “Eras Tour”. During its theatrical run, the Eras Tour earned $261.7 million worldwide, marking a historic milestone for the music and film industry.
The Eras Tour is the cinematic version of a Taylor Swift concert, and its success will likely push other music artists to do the same.
Struggling with streaming
Disney once again came short of the market’s streaming expectations. Disney+ lost 1.3 million subscribers in the last quarter, which is much more than what Wall Street expected at 700,000 losses.
The streaming service continues its difficult journey toward profitability. Disney+ generated $138 million in losses, a staggering amount albeit much lower than the $984 million in the same quarter last year.
The overall Entertainment sector, which encompasses streaming, generated $9.98 billion in revenues compared to the $10.54 billion expected.
During the call, Bob Iger said the company still expects to reach profitability for streaming by the last quarter of 2024. "We believe this business will ultimately be a key earnings growth driver for the company,” he said.
The company will focus on cutting costs, Iger said. A crackdown on password sharing, similar to what Netflix has done, will likely be implemented this year.
There will also be a strong focus on content. Theatrical runs will receive much more attention, as this drives new subscribers to the platform. Iger announced the sequel of Moana, whose first chapter grossed $687 million worldwide.
