Disney’s streaming ambitions hit a wall as consumers start to get more discerning about what content they want to spend their money on.
The company’s direct-to-consumer business posted an operating loss of $512 million, an improvement over the $1.06 billion it lost a year ago, in the fiscal third quarter.
The results illustrate how Disney, a media titan with a wealth of content, is under pressure as the streaming market transforms. Since returning to replace struggling CEO Bob Chapek, Bob Iger has faced his own challenge amid changing consumer viewing habits and problems like the Hollywood writers and actors’ strikes.
The once high-flying service Disney Plus has been brought down to the ground amid slowing customer growth and a tepid response to its more recent programming, from the critically lambasted Marvel Cinematic Universe spy thriller Secret Invasion to the uneven third season of The Mandalorian.
Disney CEO Bob Iger said the company is still working towards turning a profit in its direct-to-consumer streaming services by the end of fiscal 2024.
Disney Plus lost 300,000 subscribers in its domestic market of Canada and the US. In total, it added 800,000 subscribers thanks to stronger growth in the international market, although a majority of those overseas subscribers spend far less each month.
Hurting the company was lower revenue per subscriber for both ESPN+ and Hulu.
Iger said on the call that 3.3 million customers have signed up for Disney Plus’ cheaper ad-supported tier.
In total, Disney posted a net loss of $460 million, or 25 cents a share, compared with a year-earlier profit of $1.41 billion, or 77 cents a share. Revenue rose to $22.3 billion vs. $21.5 billion a year ago. Excluding one-time items, per-share earnings were $1.03 a share.
Analysts, on average, forecasted earnings of 95 cents a share on revenue of $22.5 billion, according to Yahoo Finance.