Disney Q3 revenue up 4%; streaming subs flat
August 7, 2024
The Walt Disney Company has reported revenue of $23.2 billion (€21.2bn) for its Q3 2024 fiscal year, rising 4 per cent on the same quarter last year.
The number of Disney+ subscribers rose by around 1 per cent to 118.3 million: In the US and Canada, the streaming service added a net 800,000 new subscribers to hit 54.8 million, and international Disney+ Core customers (excluding Disney+ Hotstar) decreased by about 100,000 to 63.5 million. Total Hulu subscribers grew 2 per cent to 51.1 million.
Disney+ domestic average revenue per user (ARPU) fell 3 per cent to $7.74 due to the impact of subscriber mix shifts, while international ARPU (excluding Hotstar) grew 2 per cent to $6.78 due to price increases, partially offset by foreign exchange impact. Hotstar ARPU grew 50 per cent to $1.05, driven by higher ad revenue.
Disney’s combined streaming business (Disney+, Hulu, ESPN+) together turned a profit for the first time. The combined business posted an operating profit of $47 million compared with a loss of $512 million in the same quarter last year. However, without ESPN+, the DTC streaming unit reported a loss of $19 million.
Disney’s linear TV business saw revenue fall by 7 per cent whilst operating income was down 6 per cent.
Pixar’s Inside Out 2 was a huge hit at the box office for Disney in the quarter, with the sequel movie laying claim to the highest grossing animated movie of all time, having taken over $1.5 billion since its June release. Riding its coattails, the original Inside Out movie (released in 2015) attracted more than 1.3 million Disney+ sign-ups in the period and generated over 100 million views globally.
Disney’s theme parks business was impacted by slowing consumer demand and inflation, with operating proft down 6 per cent. Revenue for the overall experiences unit – which includes domestic and international parks and experiences, and consumer products – was up 2 per cent to $8.38 billion.
“Our performance in Q3 demonstrates the progress we’ve made against our four strategic priorities across our creative studios, streaming, sports and Experiences businesses,” commented Bob Iger, The Walt Disney Company CEO. “This was a strong quarter for Disney, driven by excellent results in our Entertainment segment both at the box office and in DTC, as we achieved profitability across our combined streaming businesses for the first time and a quarter ahead of our previous guidance. Despite softer third quarter performance in our Experiences segment, adjusted EPS for the company was up 35 per cent, and with our complementary and balanced portfolio of businesses, we are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets.”
Responding to the results, Steve Knight, CEO at UIC Digital, said: “Disney’s recent price hike for its streaming services, including a $2 increase for both ad-supported and ad-free tiers of Disney+, highlights the platform’s growing value. The ad-tiered version has been particularly popular, drawing in cost-conscious consumers and driving strong subscriber growth. It’s also become a favoured choice for advertisers, competing effectively with traditional TV. These strategic pricing adjustments reflect its commitment to enhancing user experience and sustaining growth, which is critical in today’s market to maintaining an edge. Disney is focusing on personalising content delivery to ensure viewers receive relevant content at the right times, keeping them engaged and returning for more. A competitive user experience is crucial. Embracing digital innovations like AI for improved search and navigation to boost engagement should be where the money is spent. As the streaming industry evolves, Disney’s ability to innovate while retaining its sense of magic will determine its continued success.
Joe Rohrlich, CEO at Recurly, said: “Strong results from Disney today indicate an effective multichannel strategy that has linked together all aspects of the media giant’s brand. Increases in the number of subscribers to Disney+ form a significant part of this success, furthered significantly by the popularity of their ad-tiered offering. Consumers are continuing to look for value in their subscription services and offering more competitive pricing through advertising is clearly popular with financially-savvy audiences. Disney’s strengths here also lie in their ability to stretch beyond the traditional streaming service and into an entire universe of extras. Experiential offerings like Disney’s theme parks and cruise ships blend with their world-famous content to engage audiences more effectively, giving avid fans even more reason to get on board. ”
“Future opportunities for Disney lie in growing their existing consumer base, which it has previously been very successful at through acquisition of existing popular content with their own loyal fanbases like Star Wars. The latest award-winning shows like The Bear complement masses of content with cult-following like The Simpsons and Marvel’s extensive Cinematic Universe, but to contend with platforms like Netflix proving economic value to consumers should remain its priority,” concluded Rohrlich.