Disney reports strong fiscal Q3 earnings, mixed message on streaming business

With so many different choices on the market as competition heats up, it seems that the pressure on the cost of streaming video services is increasing. Warner Bros. In its earnings call 8/1, Discovery emphasized the benefits of being a diversified media company and Walt Disney Co.
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The company reported earnings on 8/10, with Bob Chapek, CEO and director, emphasizing its full portfolio of assets.

“Our results demonstrate The Walt Disney Company’s ability to leverage our diverse business ecosystem and explore growth opportunities across industries and distribution channels,” Chapek said. “And I’m pleased to say that our creative engines are firing on all cylinders across franchises, general entertainment and sports,” he continued.

They also conveyed different messages on their streaming businesses. On the one hand, Disney+ boasted that they had 14.4 million subscribers in their last quarter, but almost all of them came from outside of North America.

However, with the addition of ESPN+ and Hulu, the streaming services now top 221 million subscribers, surpassing Netflix.
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For the first time. On the other hand, They lowered their forecast for the fiscal year ending September 2024 to 215-245 million range for Disney+ and Disney+ Hotstar from 230-260 million previously.

The company previously announced a price increase for ESPN+ effective August 23. The monthly fee has gone from $6.99/month to $9.99/month and the annual fee has gone up significantly, from $69.99/year to $99.99/year, and the company had. More news on price hikes.

The company’s massive price hikes on ESPN+ and other streaming services have not resulted in a significant number of cancellations. “One only has to look at our recent significant increase in ESPN, which has no significant impact on our energy. And we believe we have a lot of value for money,” Chapek said.

Starting October 10, Hulu will drop from $6.99 per month to $7.99 per month without ads, or you can opt-in to pay annually, which will increase from $69.99 per year to $79.99 per year.

Starting December 8, the ad-supported version of Disney+ will start at a $7.99 price point, ad-free Disney+ will go from $7.99 to $10.99 per month, and the annual subscription price will increase from $79.99 to $109.99. However, they are cautiously dipping their toes in the water on the advertising front.

“We’re taking a deliberately limited approach, which means we’re starting with a low ad load and low frequency on Hulu.” said Christine McCarthy, EVP and CFO.
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. But because of that disciplined low ad load, low frequency and our strong ad demand, it will translate to some industry-leading CPM rates for Disney+ in the near future,” she continued.

“It’s clear that our unrivaled portfolio continues to be highly sought after by advertisers. “Combined with our deep expertise in ad technology, we are in a strong position to launch our ad-supported Disney+ platform with a strong advertising commitment,” Chapek said.

The price increase may be related to the cost of content. Chapek said, “As you know, Disney+ is still a young business and we learn more every day about the services ability to attract new fans to our powerhouse franchises. For example, in addition to driving engagement among tens of millions of Marvel fans, we’ve seen each new Disney+ original Marvel series attract growing audiences and new subscribers who weren’t previously engaged with Marvel content on the service. It allows us to explore new characters and genres.”

Overall, it was a good quarter in fiscal Q3 with revenue up 26% to $21.5 billion, segment revenue up 50% to $3.6 billion and net income up 53% to $1.4 billion. Investors responded well, with shares in DIS rising 4.6% (+$5.16) to $117.69 on August 11.