Published - August 10th, 2023 @ 1:05 PM (GMT+2)
Disney (NYSE:DIS), the global entertainment giant, has been in the spotlight with its recent Q3 earnings report. Here's a comprehensive look at the company's financial performance, focusing on its streaming services and overall revenue.
Disney's Q3 Revenue Miss & Streaming Performance:
Disney reported a miss on revenue for the third quarter. However, the company cut its streaming losses to $512 million, down from over $1 billion in streaming losses one year ago. Disney+ subscribers came in below expectations, with numbers at 146.1 million as opposed to the 154.8 million predicted by analysts. The Street was bracing for a loss of $777.7 million, so the narrower loss in the Direct-to-Consumer (DTC) business was seen as good news for investors.
However, the subscriber numbers across the board were disappointing, with Disney Plus subscribers at $146.1 million, ESPN Plus subscribers just shy of the Street's expectations at $25.2 million, and Hulu subscribers coming in a bit light. The operating income at Disney's parks was $2.43 billion, up 11% on a year-over-year basis, with growth at Shanghai Disney Resort and Hong Kong Disney.
Cost-Cutting Efforts & Price Hikes:
Disney's focus on cost-cutting has been evident, with the company's streaming business losses narrowing to $512 million. The company also announced a 27% increase in the price of the ad-free tier of the Disney+ service to $13.99 and a 20% hike in the no-ad version of Hulu. These changes are part of Disney's strategy to attract and retain subscribers in a competitive streaming market. The company also plans to launch ad-supported streaming in Europe and Canada and provide U.S. subscribers with a new, ad-free package in the coming months.
Disney's CEO, Bob Iger, has been emphasizing the company's cost-effective approach, highlighting $1 billion in operating-income improvement at the company's streaming business over the last three quarters. The company aims for profitability in 2024 and is on track to cut costs by more than the $5.5 billion promised to investors in February.
Revenue & Subscriber Challenges:
Despite the positive news on cost-cutting, Disney's revenue for the quarter ended July 1 rose only 4% to $22.33 billion, just short of Wall Street estimates. The company's traditional television business continued its decline, with TV revenue falling 7% to $6.7 billion and operating income falling 23% to $1.9 billion.
Disney's streaming video services cut losses to $512 million in the fiscal third quarter from about $1.1 billion a year ago. However, it added only 800,000 Disney+ subscribers, 100,000 subscribers shy of analyst estimates, and shed 12.5 million subscribers to the Disney Hotstar service in India. The company also took $2.65 billion in impairment and restructuring charges in the quarter.
Conclusion
Disney's Q3 report shows a mixed picture, with significant improvements in streaming losses but revenue and subscriber growth challenges. The company's focus on cost-cutting and price hikes reflects a strategic shift to enhance profitability. However, the pressure to improve the quality of films, position ESPN for direct streaming, and resolve industry strikes adds complexity to Disney's transformation journey.
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