Disney’s combined streaming business, which includes Disney+, Hulu, and ESPN+, nearly broke even in the second quarter, with revenues of $6.19 billion and an operating loss of just $18 million. This represents a 97% decrease in operating losses compared to the same period last year. CEO Bob Iger noted that the entertainment giant’s entertainment streaming business of Disney+ and Hulu achieved an operating income of $47 million in the quarter, marking a significant milestone after reporting peak losses only 18 months ago. Iger emphasized that the path to streaming profitability for Disney will not be linear, but the company anticipates profitability for its combined streaming business in the fourth quarter, with further improvements expected in the following year.
Disney has several streaming initiatives in the works, including cracking down on subscribers sharing account passwords with non-household members and adding an in-platform ESPN tile to Disney+ in the U.S. by the end of the year. The company introduced the “Hulu on Disney+” feature in the U.S. earlier this year for bundle subscribers and has seen positive results. Disney plans for its streaming business to eventually achieve double-digit profit margins, although CFO Hugh Johnston did not provide a specific timeline for reaching this goal during the earnings call on Tuesday. Despite this, he expressed confidence in the growth prospects of the streaming business, highlighting its positive trajectory.
In addition to its streaming business, Disney generated $22.08 billion in revenue in the second quarter, slightly above the previous year’s figure but below Wall Street estimates. The company reported adjusted earnings per share of $1.21, surpassing the $1.10 estimate. Executive at Disney have consistently projected growth in profitability for their streaming services, with the hope of reaching a significant milestone by 2024. While third-quarter projections may be softer due to seasonal factors, Disney remains optimistic about the future of its streaming business and has prioritized the necessary steps to achieve profitability and sustainable growth in the coming years.
The addition of ESPN content to Disney+ and the crackdown on shared accounts are part of Disney’s efforts to expand and enhance its streaming services, with a focus on user experience and monetization. By investing in exclusive content, improving user engagement, and enforcing stricter policies, Disney aims to attract and retain subscribers while increasing profitability. These strategic measures, alongside ongoing efforts to streamline operations and optimize revenue streams, are expected to drive growth and solidify Disney’s position as a major player in the competitive streaming market. With a vast subscriber base, strong brand recognition, and a diverse portfolio of content, Disney is well-positioned for long-term success in the rapidly evolving streaming industry.