Disney adds streaming subscribers but cuts its long-term goal

Walt Disney defied worries about a downturn in the streaming industry by adding a solid 14.4 million subscribers to its Disney Plus service in the last quarter, bringing its total number of paid streaming customers to 221 million – slightly ahead of Netflix.

But Disney has cut its long-term forecast for its total Disney Plus subscriber count due to its recent loss of rights to broadcast Indian Premier League cricket matches. Instead of 260 million total subscribers by 2024, company officials now expect Disney Plus to reach 245 million, they said on Wednesday.

However, Disney has maintained its goal of making Disney Plus profitable by 2024. While Wall Street once applauded Disney and its rivals for spending big on new streaming content to attract subscribers, the Investors are now focusing on how companies will achieve profitability.

Disney’s streaming business lost $1.1 billion in the third quarter, more than triple its loss of $293 million a year earlier.

Aiming for profitability, Disney said it will raise the price of its streaming services – which include Hulu and ESPN Plus – in the United States later this year, a move that will coincide with new ad-supported releases of the services.

The details came as Disney reported strong third quarter results, thanks in part to booming crowds at its theme parks in the United States and France, where attendance exceeded pre-coronavirus pandemic levels. despite rising inflation.

Disney chief executive Bob Chapek said the park’s strong performance was due in part to “pent-up demand”, but he added that the rebound was “much more resilient and much more durable” than a recovery at short term after the pandemic.

Revenue rose 26% year-on-year to $21.5 billion in the quarter, and net income rose 53% to $1.4 billion. Disney’s earnings per share of $1.09 were above Wall Street estimates of 96 cents.

The results were a boost for Chapek, whose contract was renewed this summer after a bruising few months following Disney’s response to Florida’s controversial law aimed at restricting discussion of sexual or gender identity in entertainment. primary schools.

“I’m incredibly pleased with our performance this quarter,” Chapek said, pointing to theme park activity and growth at its streaming services.

The entertainment industry has been rocked this year following Netflix’s revelation that it was losing subscribers, raising concerns that the potential streaming market may be smaller than investors had believed. Earlier this month, Warner Bros. Discovery announced a strategic shift that reduced the importance of subscription streaming services. Like Disney, Netflix has also announced plans for an ad-supported service in hopes of attracting more cost-conscious consumers.

In June, Disney lost in an auction for the rights to broadcast IPL cricket matches, which has been a driver of subscriber growth for Disney Plus. Chapek defended the “disciplined decision” not to bid for the rights, which cost Viacom $3 billion.

Disney shares rose 6.6% to $119.90 in after-hours trading. The stock is down almost 30% this year.

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