What’s going on?
Disney reported some mixed results this week – including some slipping streaming figures.
What does this mean?
The Disney+ streaming service continued to lose subscribers last quarter, with the total count falling well short of expectations. A big chunk of that dip was due to losing streaming rights for popular cricket games in India – but despite the dropoff, the service still managed to cut losses more than expected. Add to that a theme-park business that’s still chugging along nicely, and overall profit actually managed to beat expectations. Plus, Hollywood strikes mean that this year’s content spending is set to be about $3 billion lower than expected. And the firm’s planning to hike the price of its ad-free Disney+ and Hulu subscriptions too, hoping to turn a profit in that segment by next September. That news was music to investors’ ears – and Disney shares jumped 6%.
Why should I care?
For markets: In need of movie magic.
Disney’s banking big on three powerhouses – parks, streaming, and film studios – to drive growth. But while parks and streaming seem on track, the studios are looking a bit iffy. Sure, they’ve scored with “Avatar: The Way of Water”, but “Indiana Jones” and “Elemental” didn’t exactly light up the box office. After all, hefty production and marketing costs make just breaking even a challenge – and that’s not to mention the thorny issue of film quality.
The bigger picture: Channel hopping.
Disney’s traditional TV networks, like ABC, Freeform, and FX, used to rake in about half of the firm’s operating income. But after they took another profit dent last quarter, they might soon be on the chopping block. The firm’s hinting that the networks might not be “core” to Disney any longer – so while the firm’s pooh-poohed ideas about a sale of the whole company to a tech giant like Apple, it’s looking like the struggling networks could be the ones set to go under the hammer.
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Originally Posted August 10, 2023 – Gently Down The Stream
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