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The Walt Disney Co. Streaming Business Progress
The Walt Disney Co., a global entertainment powerhouse, continues to make strides towards profitability in its streaming business. Despite facing challenges in the past, the company’s direct-to-consumer division, which encompasses popular platforms such as Disney+, Hulu, and ESPN+, is showing signs of improvement.
Financial Performance
In the fiscal second quarter, Disney reported an $18 million operating loss in its direct-to-consumer division, a significant decrease from the $216 million loss in the previous quarter and a substantial improvement from the $659 million loss year-over-year. Notably, the entertainment segment of the streaming business, which includes Disney+ and Hulu, achieved an operating income of $47 million for the quarter, marking its first profitable quarter. This is a remarkable turnaround from the $587 million loss reported during the same period in the previous year. Likewise, ESPN+ reported a modest $18 million loss compared to a $659 million loss in the prior year.
Future Outlook
While Disney is optimistic about the profitability of its combined direct-to-consumer division by the end of the fiscal year 2024, it anticipates a softer performance in the upcoming quarter, particularly due to challenges with Disney+ Hotstar, its Indian streaming service. Despite this, Disney continues to see growth in its ‘core’ Disney+ subscribers, which excludes Disney+ Hotstar users, with an increase of 6.3 million bringing the total to 117.6 million. Hulu also surpassed 50 million subscribers as Disney moves closer to acquiring the remaining stake in the service from Comcast.
CEO Bob Iger expressed his satisfaction with the company’s performance, particularly highlighting the positive results from the Experiences segment and the streaming business. Entertainment streaming turned profitable this quarter, setting a strong foundation for overall profitability in the streaming businesses by the fourth quarter of the fiscal year.
Parks and Experiences Division
Disney’s parks and experiences division saw a 10% increase in revenue to $8.4 billion, largely driven by international growth. International revenue surged by 29% to $1.5 billion, while domestic revenue showed a 7% increase to $5.9 billion. Operating income for the business also grew by 12%, with Walt Disney World Resort and the Disney Cruise Line leading the way. However, the Disneyland Resort in Anaheim faced some challenges resulting in lower performance.
Despite these positive strides, Disney reported a net loss of $20 million, or 1 cent per share, for the quarter, a significant shift from the $1.3 billion gain, or 70 cents per share, from the previous year. This financial announcement caused Disney’s stock to drop more than 5% in pre-market trading on Tuesday.
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