Disney Dives Lower – Streaming is Far from Profitable 📺

Disney Dives Lower – Streaming is Far from Profitable

In the world “where dreams come true”, it seems that Disney has been unable to make its dream to turn Disney+’s success into a reality. After Wednesday’s trading day, Walt Disney Company reported its fiscal second-quarter earnings, a disappointment that led to losses of 8.73% or roughly $15 billion of market capitalization. The reason for such negative sentiment didn’t necessarily stem from their earnings, but rather its vast subscriber losses during the previous six months. For its fiscal second quarter, Disney+ lost 4 million subscribers, leading to operating losses of $400 million for the streaming unit. Despite the losses of sales volume, Disney was successfully able to increase prices and cut several costs to balance the declines, however, they have yet to turn Disney+ into a profitable business.

Overall, Walt Disney Company reported top and bottom lines that were in line with Wall Street’s expectations, with large contributions from its smaller but most profitable revenue streams of Parks, Experiences, and Products. Regardless, their media and entertainment segment accounted for around two-thirds of their total revenue in 2022, making the consecutive quarterly losses in Disney+ subscribers crucial to their business operations. With Netflix’s new price-effective subscription tier and an over-saturated streaming market, Disney’s plan to increase its subscription prices may not be the best option long-term. However, with their continued efforts in cost-saving and operational-efficiency, alongside their upcoming integration of Hulu content to their platform, Disney+ retains the chance to upset Netflix and take the “iron throne” for the media streaming industry.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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