Disney’s Streaming Business – A Glass Half-Full or Half-Empty?
Disney’s direct-to-consumer streaming arm, Disney+, has made some progress in reducing its operating losses, but it’s still far from being in the black. During the quarter ending in December, Disney recorded a $1.0 billion operating loss, despite driving a record revenue of $5.3 billion.
Reduced Losses, but Still Losing Money
The direct-to-consumer loss was reduced by $500 million from the previous quarter’s loss of $1.5 billion, but it still remains a significant amount. This was the first time since early 2021 that the company showed evidence that it might eventually turn a profit.
Customer Base Growing Slowly
Although Disney+ lost some customers last quarter, it added a minimal number of new customers elsewhere, with the platform’s domestic and international customer headcount growing to 104.3 million for the quarter ending in December. Company-wide streaming subscriptions slipped from 235.7 million in Q4 to 234.6 million.
Cost-Cutting Efforts
Walt Disney spent less on selling, general, and administrative expenses last quarter than in previous quarters, but spent more than $400 million less than it did in the previous quarter. The company also spent more on streaming content last quarter than it has in any quarter yet.
Declining Per-User Streaming Revenue
Although ESPN+ saw an improvement in average revenue per user (ARPU), both the North American and international versions of Disney+ saw lower ARPUs last quarter, which calls into question the actual pricing power of the platform.
Mixed Results
While the streaming operation is driving Disney’s stock price, last quarter’s apparent fiscal progress may or may not be sustainable. Production and content costs continue to rise, and the weakening per-user revenue metrics raise questions about the future of the platform. On the bright side, Disney’s theme parks saw 21% growth last quarter, and its film business performed well.