Walt Disney Co.’s steaming video business narrowed its losses in the most recent fiscal quarter compared to a year ago. But the company’s flagship online service, Disney+, lost subscribers for the second straight quarter, thanks to soft results from its direct-to-consumer product in India.
Disney+ lost a total of 4 million subscribers during the three months that ended April 1, the Burbank entertainment giant said Wednesday. That decline primarily stemmed from the struggles of the low-cost Disney+ Hotstar service, which has suffered from the loss of streaming rights to Indian Premier League cricket matches.
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This comes after Disney+ shed 2.4 million subscribers during the first quarter, marking the first such drop for the service since it launched in November 2019. Disney+ now has a total of 157.8 million subscribers globally.
Disney, like other legacy media companies, is reckoning with the harsh realities of the streaming business after years of rapid growth as it tried to compete directly with Netflix. Disney+ started strong, quickly soaring during the COVID-19 pandemic as families were desperate for entertainment options.
But the streaming industry has lost steam, and Wall Street has demanded a realistic path to profitability for the money-losing apps — not just Disney+, but also rivals such as HBO Max, Peacock and Paramount+.
Not counting India, Disney+ fared better, though its rise has stagnated noticeably, causing some analyst to question whether it can hit its subscriber targets.
Disney+ hit 104.9 million subscribers worldwide, excluding Hotstar, gaining just 600,000 subscribers for a gain of 1% compared to the prior quarter. Subscriber counts from the U.S. and Canada were down 1%, but rose 2% internationally.
Crucially, Disney lost less money from its direct-to-consumer segment, comprised of Disney+, Hulu and ESPN+.
Disney’s streaming businesses posted an operating loss of $659 million during the second quarter, compared to the $887 million it lost during the same quarter a year ago. Disney has promised investors that the service will be profitable by the end of fiscal 2024.
Chief Executive Bob Iger, who returned to the company in November, has been on a mission to find $5.5 billion in cost savings, including by cutting a projected 7,000 jobs. So far, Disney has shed 4,000 of those roles through two rounds of layoffs and eliminations of unfilled positions.
Iger, in a written statement, praised the more “streamlined” Disney.
“We’re pleased with our accomplishments this quarter, including the improved financial performance of our streaming business, which reflect the strategic changes we’ve been making throughout the company to realign Disney for sustained growth and success,” Iger said. “[W]e continue to deliver for consumers, while establishing a more efficient, coordinated, and streamlined approach to our operations.”
Overall, Disney reported quarterly revenue of $21.8 billion, up 13% from a year prior and slightly exceeding the average estimates of analysts polled by FactSet. Profit morethan doubled to $1.27 billion. Adjusted earnings of 93 cents a share matched analyst expectations.