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HomeTop Business NewsDisney's Streaming Price Surge: CEO's Reassurance to Investors Takes Center Stage

Disney’s Streaming Price Surge: CEO’s Reassurance to Investors Takes Center Stage


Disney CEO Bob Iger has acknowledged the challenges facing the entertainment company in the near future. However, he highlighted the progress made in cutting costs and focusing on creativity. Despite Disney’s quarterly results showing some weaknesses, the company’s stock rose nearly 3% in after-hours trading. Iger emphasized the $1 billion improvement in operating income at Disney’s streaming business over the last three quarters, with a goal of profitability by 2024. He also acknowledged the need to improve the quality of Disney’s films, position ESPN for streaming, and resolve the ongoing strikes in Hollywood. Iger stated that there is more to accomplish before the company’s transformation is complete.

Disney exceeded Wall Street’s profit expectations for the fiscal third quarter and remains on track to cut costs by more than the $5.5 billion promised to investors in February. However, the company posted quarterly revenue below expectations and fell slightly behind analyst projections for U.S. subscribers of Disney+. To attract and retain subscribers in a competitive streaming market, Disney announced plans to raise the price of the ad-free tier of Disney+ by 27% and increase the no-ad version of Hulu by 20%. The company also intends to launch ad-supported streaming in Europe and Canada and provide U.S. subscribers with a new ad-free package in the coming months. Iger also mentioned that Disney will address the issue of password sharing next year.

Disney reduced losses at its streaming video services to $512 million in the fiscal third quarter, down from about $1.1 billion a year ago. It added 800,000 Disney+ subscribers, slightly below analyst estimates, but lost 12.5 million subscribers to the Disney Hotstar service in India due to the relinquishment of rights to Indian Premier League cricket matches. Jesse Cohen, a senior analyst at Investing.com, believes that Disney will need to cut prices to stimulate demand and defend its market share in the increasingly competitive industry.

Disney’s revenue for the quarter ended July 1 rose 4% to $22.33 billion from a year earlier, just falling short of Wall Street estimates. The company reported per-share earnings of $1.03, excluding certain items, surpassing Wall Street projections of 95 cents per share. In the quarter, Disney incurred $2.65 billion in impairment and restructuring charges, reflecting the cost of removing some content from its streaming services, terminating licensing agreements, and making severance payments to laid-off workers.

Disney’s traditional television business continued to decline with higher sports programming production costs and lower affiliate revenue. TV revenue fell 7%, while operating income fell 23% to $1.9 billion. On the other hand, Disney’s direct-to-consumer business reported a 9% increase in revenue to $5.5 billion, with average revenue per subscriber rising at Disney+ and Hulu. The content sales and licensing unit, which includes film and television sales, reported a deeper operating loss of $243 million compared to a loss of $27 million a year ago. Disney’s Parks, Experiences, and Products group reported a 13% increase in revenue and an 11% increase in operating income. The results were boosted by the rebound of the Shanghai Disney Resort, which was open for the full quarter compared to the same period last year when it was closed for all but three days due to COVID-19. The unit experienced lower operating income at its domestic parks, primarily due to decreases at Walt Disney World Resort in Orlando, Florida.

Overall, while Disney faces challenges, the company is making progress in various areas and remains focused on its transformation.

Thomas Lyons
Thomas Lyons
Thomas, the founder and chief editor at Top Rated, harbours a deep-seated passion for business, news, and product reviews. His thirst for knowledge and experience has led him on a journey across the length and breadth of the country, enabling him to garner a wealth of insight. At TopRated.ie, his sole aim is to deliver meticulously researched news and provide impartial reviews of fact checked Irish companies, thus helping readers make well-informed decisions.


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