Disney+ Drops 1.3 Million Subscribers Amid Price Hike, Streaming Loss Shrinks by $300 Million
Disney+ lost 1.3 million subscribers in the final quarter of 2023 amid a hefty price hike that went into effect last fall
variety.com
Feb 7, 2024 1:06pm PT
Disney+ Drops 1.3 Million Subscribers Amid Price Hike, Streaming Loss Shrinks by $300 Million
By Jennifer Maas
Courtesy of Marvel Studios
Disney+ lost 1.3 million subscribers in the final quarter of 2023 amid a hefty price hike that went into effect last fall, but managed to narrow its streaming business’ losses by $300 million during the October-December period.
Disney+ Core subscribers (which include U.S. and Canada customers, as well as international users, excluding the India-based Disney+ Hotstar) dropped to 111.3 million from the 112.6 million reported in the previous quarter, according to Disney’s quarterly earnings results released Wednesday.
In its financials, which cover the Mouse House’s first quarter for its fiscal year 2024, Disney projects adding between 5.5 million and 6 million subscribers to Disney+ Core by the end of its current quarter, which runs January-March.
Meanwhile, Disney+ Hotstar added 700,000 subscribers during the October-December quarter, rising to 38.3 million from the 37.6 million it tallied at the end of September. These results mark the first growth for Disney+ Hotstar since last year’s mass exodus of 12.5 million subscribers amid a strategy shift to move away from low-margin customers, and the loss of key sports rights in the region.
Collectively, Disney totaled 149.6 million streaming subscribers across the two services at the close of 2023, dipping slightly from an overall of 150.2 million the prior quarter.
At Hulu, Disney saw a lift from 43.9 million subs to 45.1 million in its streaming-only subscriptions, and an even 4.6 million subscribers to its Live TV + SVOD option.
Disney+ began integrating Hulu content into its platform in early December. The initial “beta” of Hulu on Disney+ will be followed by the launch of a more integrated version in March 2024.
According to Disney, the company is on track to reach profitability in its streaming business by the end of its current fiscal year, with the above-mentioned $300 million narrowing in losses in Q1 vs. Q4.
Disney reported $500 million in cost savings for the quarter and says it’s “on track to meet or exceed our $7.5 billion annualized savings target by the end of fiscal 2024.”
Free cash flow for the quarter stood at $886 million.
Broken down by segment, Disney’s revenue was as follows: $10 billion for its Entertainment division, comprised of TV, film and streaming businesses, which was down 7% from the year-ago quarter; $4.8 billion for Sports, including ESPN and Star, which is up 4%; and $9.1 billion for Experiences, including parks and consumer products, at an increase of 7%.
Linear networks sales fell 12%, as direct-to consumer revenue increased by 15%. Content sales and licensing revenue, which includes box office results, dropped by 38%, a hit Disney attributes to poor performance for “The Marvels” and “Wish” compared to “Black Panther: Wakanda Forever” and “Avatar: The Way of Water” in the comparable year-over-year quarter.
Wall Street forecast earnings per share (EPS) of 99 cents on $23.6 billion in revenue for Disney’s most recent quarter, according to analyst consensus data provided by LSEG, formerly Refinitiv. Disney reported diluted EPS of $1.04 on $23.5 billion in revenue. With some favorable adjustments, that EPS increased to $1.22.
Disney reports its earnings results amid an ongoing proxy fight with activist investor Nelson Peltz, chairman of Trian Fund Management. While both Trian and rival firm Blackwells Capital have launched dueling proxy fights in an attempt to push Disney to make changes to its corporate governance and long-term strategy, it’s very unlikely either will result in pushing Disney to add new board members in its shareholders vote at the company’s April 3 annual meeting.
“Just one year ago, we outlined an ambitious plan to return The Walt Disney Company to a period of sustained growth and shareholder value creation,” Disney CEO Bob Iger said in a letter to shareholders. “Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our Company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences.
“As we build for the future, the steps we are taking today lend themselves to solidifying Disney’s place as the preeminent creator of global content. Looking at the renewed strength of all of our businesses this quarter – from Sports, to Entertainment, to Experiences – we believe the stage is now set for significant growth and success, including ample opportunity to increase shareholder returns as our earnings and free cash flow continue to grow.”
Disney’s board of directors announced a cash dividend of $0.45 per share Wednesday, an increase of 50% versus the last dividend paid in January, which will be payable to shareholders July 25.
Disney stock closed Wednesday at $99.14 per share. The regular U.S. stock markets will reopen at 9:30 a.m. ET.
Iger and other Disney executives will host a conference call at 4:30 p.m. ET to discuss the quarter in greater detail.
