Disney streamer business continues to grow, buts losses mount

Walt Disney continued to achieve strong growth in its streaming business during Q4 2022, but at a cost. Across all of its core SVOD brands (Disney+. ESPN+ and Hulu), the company now has 235 million subscribers. But it also reported direct-to-consumer operating losses of $1.5 billion for Q4, thanks to content and marketing investments.

The scale of the losses, combined with lower than expected profits, unnerved financial markets. However company CEO Bob Chapek was upbeat, forecasting profitability in 2024: “Our fourth quarter saw strong subscription growth with the addition of 14.6 million total subscriptions, including 12.1 million Disney+ subscribers. The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally, and we expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate,” he said.

Bob Chapek

“By realigning our costs and realising 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 that will drive continued growth and generate shareholder value.”

Looking at the company’s performance across all segments, revenues for Q4 grew 9% while the full year increase was 23%. Chapek attributed this, in part, to “record results at Parks, Experiences and Products.” Linear networks and content licensing were both up year on year, but down for Q4 (5% and 15% respectively). In its financial statement, the company said: “International Channels revenues for the quarter decreased 18% to $1.1 billion and operating income decreased 18% to $0.1 billion. Lower results were primarily due to a decrease in advertising revenue and, to a lesser extent, higher marketing spend and an unfavourable foreign exchange impact.”

Drilling down into the figures, flagship streaming brand Disney+ added 12.1m subscribers for Q4, and now accounts for 102.9m subs in total. The majority of the Disney+ growth came internationally. Hulu remains a major contributor to Disney’s streaming business (47.2m subs) and ESPN+ grew robustly to 24.3m subs. Disney+ Hotstar in India is another critical part of the story, with 61.3 million subs. DTC revenues for Q4 2022 grew 8% to $4.9 billion. Disney expects the rollout of an ad-supported tier to help accelerate the company’s move towards profitability.

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