Disney + Marvel website home screen on a laptop in the Brooklyn borough of New York, US, on Monday, July 18, 2022.
Gabby Jones | Bloomberg | beautiful pictures
The biggest companies in media and entertainment are asking investors to focus on revenue and profits instead of streaming subscriber growth — a message that has countered. Disney Tuesday.
Disney added 12.1 million Disney+ subscribers and 14.6 million direct-to-consumer customers in total fiscal fourth quarter. Both numbers beat most analysts’ estimates and blew away quarterly additions from Netflixonly achieved 2.4 million new subscribers during the quarter.
A year ago, strong streaming numbers may have pushed Disney’s stock higher. But media and entertainment executives are pushing investors to value their companies based on profits and revenue rather than pure subscriber growth. And those numbers don’t sit well with Disney this quarter.
Shares of Disney fell 6% after hours.
Disney’s total quarterly revenue of $20.1 billion beat analysts’ median estimates by nearly $1 billion, based on Refinitv consensus estimates. Net operating loss in Disney’s streaming division, which includes Disney+, Hulu, and ESPN+, increased to $1.47 billion in the quarter. This is more than double the loss from a year ago, which Disney partly blames on a lack of “top-access” content or theatrical movies that Disney charges an extra $30 to stream. routes, such as “Black Widow” and “Jungle Cruise.”
Disney has said it expects the quarter to be a loss-making year for streaming, and it has reaffirmed the profitability to come.
“We expect our DTC operating loss to narrow going forward and Disney+ will remain profitable in FY2024, assuming we don’t see a meaningful change in the economic environment. “, Disney CEO Bob Chapek said in a statement.
Disney will roll out its ad-supported tier for $7.99 per month on December 8. The company announced significant price increase will also start next month. Both measures are being taken to drive revenue and profit rather than subscriber growth.
But this quarter, Disney found itself caught between the previous story of subscriber growth and the current and future narrative of business fundamentals. And investors were unforgiving.
SEE: Disney earnings reaction
