The Walt Disney Co., the world’s largest entertainment giant, reported on Tuesday that fourth-quarter results came in below where Wall Street expected, showing signs of streaming subscription fatigue.
While streaming subscriptions increased by 164.2 millions during the quarter, the conglomerate reported a profit margin of 30 cents per share on revenues of $20.15billion. But there are concerns about whether the industry Goliath can gain enough subscribers to subsidize the cost of streaming content — especially in a period where Disney is predicting profitability in 2024.
Disney, which has been in a back-and-forth battle with Netflix for the title of world’s biggest streaming platform, was expected to post a profit of 54 cents per share for the three months ending in September, a 46% increase from last year, on revenues of $21.247 billion.
Disney+ was predicted to grow by 8.9 million. It added over 12 million streaming subscribers, which reached a record of 152.1 billion in the last quarter. It was a decrease of the 14.4 million that were added during the three-month period ending June.
“Our fourth quarter saw strong subscription growth,”Prepared remarks by Bob Chapek (chief executive) “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.”
The numbers are already being absorbed by the market. After-hours trading has already seen shares fall 6%, as the direct-to–consumer strategy takes longer than expected.
Hulu had 47.2 Million subscribers while ESPN+ had 24.3 Million. Hulu and Disney+ combined have over 235million streaming subscribers. They are now the leading streaming service provider, with 223 million subscribers to Netflix.
Direct-to-consumer is likely to see a price increase in December. An ad-supported Tier is also expected to increase revenue.
The Parks, Experiences and Products division, which includes the company’s theme parks, resorts, cruise line and merchandise business, saw revenue increase more than 34% to $7.4 billion during the quarter. StreetAccount reports that Wall Street still has higher expectations for the division. Analysts expected parks revenue to be $7.5 billion.
As spending increased at its parks domestically and internationally, operating income for the division grew by 66% to $1.5 Billion. StreetAccount expected that the parks would earn $920 million in operating income. However, they managed to grab $815 million.
