(San Francisco) Disney rebounded this summer with 7 million more subscribers since the end of June, and the entertainment giant is betting on higher quality content and cost cuts to make its streaming business profitable.
After three consecutive quarters of subscriber losses, Disney reassured investors with these gains above expectations.
It now has 112.6 million subscribers, not counting the Indian version of the service – the main responsible for the decline – according to the Californian group’s quarterly results press release published on Wednesday.
The group’s three streaming platforms (Disney, ESPN and Hulu) have also significantly reduced their operating losses over one year, to $420 million for the period from July to September, instead of $1.47 billion in the summer. 2022.
Bob Iger, the company’s boss, assured Wednesday that “transforming streaming into an engine of profitable growth” is his priority, during a conference with analysts.
Last year, the company assured that Disney would achieve profitability in 2024.
The manager welcomed the “efforts” made by Disney in terms of restructuring and efficiency. “We are on track to achieve approximately $7.5 billion in cost reductions, which is $2 billion more than expected,” he said.
The enchanted kingdom has indeed cut 8,000 positions. The historic strike in Hollywood, which paralyzed production for months, also led to savings.
On the content side, Bob Iger promised a programming “balanced between sequels to very popular titles and new quality original films and series, starting with Wish”, an animated film which hits theaters in November.
“By the time the pandemic hit, we were in the process of significantly increasing our production. I always thought that quantity could undermine quality and I think that’s exactly what happened,” admitted the executive.
“We are all rolling up our sleeves, myself included, […] to produce less and focus more on quality.”
It is also counting on the diversification of sources of income – some 5.2 million subscribers have subscribed to the formula with advertising launched almost a year ago – and on a stricter policy in terms of sharing passwords between users.
This method has proven itself for Netflix, but it will not bear fruit “before 2025” at Disney, estimated the boss.
It is also counting on a new offer bringing together Disney and content from Hulu in the United States to improve its margins in streaming. This will “reduce customer acquisition costs and reduce the number of churns,” he stressed.
Disney, already the majority shareholder of this platform with more adult content, announced last week the purchase of the shares it was missing (a third of the company for $8.6 billion) from NBC Universal, a subsidiary of Comcast.
Insider Intelligence analyst Paul Verna nevertheless predicts possible “tensions with Comcast” over the price negotiated five years ago.
Overall, in its fourth quarter of its staggered fiscal year, Disney had revenue of $21.2 billion ( 5% year-over-year) from July to September, of which it generated $264 million in net profit ( 63%).
In mid-September, the entertainment giant announced investments of $60 billion over ten years for its branch including theme parks, cruises and related products.
Its revenue increased 13% year-over-year to $8.2 billion this summer.
As for the impact of the strike in Hollywood, “it was negligible” for Disney, Bob Iger said on CNBC on Wednesday.
Actors and major Hollywood studios reached an agreement on Wednesday to put an end to the social movement, announced the actors’ union SAG-AFTRA.
This strike, the worst in the sector since 1960, paralyzed the production of films and series in the United States for many months and cost the American economy billions.
The situation resolved for the writers in September, but negotiations with the actors, who walked off the job in mid-July, were only concluded on Wednesday.
They demanded better remuneration in an industry disrupted by the advent of streaming and safeguards in terms of artificial intelligence.
