Disney+ adds 7m subs in Q4
November 9, 2023
By Nik Roseveare
The Walt Disney Company has reported earnings for its fourth quarter and full year ended September 30th 2023.
Financial Results for the Quarter and Full Year. Revenues for the quarter and year grew 5 per cent to $21.24 billion (€19.8bn) and 7 per cent compared to the prior-year quarter and prior year, respectively.
Disney+ added nearly 7 million core subscribers in Q4. Disney attributed the gains to key streaming content in the quarter included theatrical titles Elemental, Little Mermaid and Guardians of the Galaxy Volume 3, original Star Wars series Ahsoka and the Korean original series Moving. The company said it expects its combined streaming businesses to reach profitability in Q4 of FY 2024 – although progress may not look linear from quarter to quarter.
Disney’s linear TV network in the US revenue dropped 9 per cent domestically, a slump it blamed on a decrease in advertising revenue primarily experienced by ABC.
“Our results this quarter reflect the significant progress we’ve made over the past year,” commented Bob Iger, Chief Executive Officer, The Walt Disney Company. “While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again. We have a solid foundation of creative excellence and innovation built over the past century, which has only been reinforced by the important restructuring and cost efficiency work we’ve done this year, and we’re on track to achieve roughly $7.5 billion in cost reductions [up from the previous goal of $5.5 billion]. Combined with our portfolio of valuable businesses, brands and assets – and the way we manage them together – Disney has a strong hand that differentiates us from others in our industry.
“As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences business. We have already made considerable advancements in these four areas and will continue to move forward with a sense of purpose and urgency, and I’m bullish about the opportunities we have before us to create lasting growth and increase shareholder value,” added Iger.
Further results highlights
• Domestic ESPN revenue and operating income grew year over year in both fiscal year 2022 and fiscal year 2023, demonstrating the value of sports and the power of the ESPN brand.
• Experiences operating income increased by over 30 per cent versus the prior-year quarter, with year over year
growth across all international sites, Disney Cruise Line, Disney Vacation Club and Disneyland Resort.
• Disney said it continues to aggressively manage its cost base, and has increased its annualised efficiency target to $7.5 billion, versus $5.5 billion previously.
• Disney expects to grow free cash flow in fiscal 2024 significantly versus fiscal 2023, approaching levels last seen pre-pandemic. This continued robust free cash flow growth, alongside a strong balance sheet, should position company well to address its investment and shareholder goals for the year and going forward.
Responding to the results, Paolo Pescatore of PP Foresight commented: “Encouraging set of results with Iger’s turnaround plan in full swing. More so in streaming with the company seem to be benefiting from the Netflix effect. Mirroring its pricing strategy is paying dividends with plentiful opportunities for future growth with unique content and bundled offerings. Integrating Disney+ along with Hulu and ESPN in the future will put the company in a strong position to drive subs, engagement and importantly revenue either through subscription or advertising. These latest results clearly underline a razor sharp focus on efficiencies across the board while focussing on content. This is in stark contrast to other traditional rivals who lack the same scale as Disney in this new streaming driven world.”
Jason Fairchild, Co-founder and CEO of the performance advertising platform for connected TV tvScientific, said he believes that Disney+ is heading in the right direction by expanding their advertising automation and measurement capabilities but it will only appeal to top advertisers. This will be less desired by small business owners who are looking to advertise their businesses through CTV.