“While necessary to deal with the current difficulties, I do not take this decision lightly,” general manager Bob Iger said during a conference call. Disney+ now has 161.8 million subscribers worldwide, after losing 2.4 million in the last three months of 2022.
It’s the first time since the streaming service launched in late 2019 that it hasn’t gained millions of new viewers in the past quarter. “Its meteoric rise is considered one of the most successful deployments in the history of the media”, welcomed Bob Iger, who launched the service before giving way to Bob Chapek in 2020, after fifteen years at the orders.
Disney asked him in November to return to his duties, in particular to tackle the problems of profitability of the platforms. “It’s time to complete another transformation, to streamline our formidable streaming business and put it on the path to sustainable growth and profitability,” detailed Bob Iger, referring to the need to “cut costs” and “to improve margins”.
Social plan announced
He then announced the social plan. The American group employed 190,000 people worldwide in 2021, 80% of them full-time, according to its annual report for that year. Investors were reassured: Disney shares took off up to 8%, before stabilizing at 6% during electronic trading after the closing of the New York Stock Exchange.
The market welcomed Disney’s financial performance for the October-December period, released in a statement on Wednesday. The enchanted kingdom achieved a quarterly turnover of 23.5 billion dollars, better than expected by analysts. Above all, the operating losses of its streaming platforms (Disney+, ESPN+ and Hulu) came out lower than expected, at $1 billion.
The group is aiming for profitability for Disney+ in 2024. Streaming platforms experienced blazing growth for years, further amplified by the pandemic, before being overtaken by the economic crisis and the frantic competition for public attention. Subscriber growth will not be linear each quarter,” warned Christine McCarthy, Disney’s chief financial officer, in November, when the star platform had just gained 12 million subscribers in one quarter.
Complicated period for the platforms
Netflix, the industry veteran and leader, had a tough first half of 2022 losing nearly 1.2 million subscribers, before bouncing back this fall and winter. The platform has more than 230 million paying subscribers but its annual net profit fell 12% to 4.5 billion.
Streaming applications make the same observation as social networks like Snapchat, Facebook or Instagram: gains in users no longer automatically translate into financial gains. Netflix and Disney therefore launched new, cheaper subscriptions in December, with , to attract even more viewers and above all to diversify their sources of income.
Disney + took the opportunity to increase its prices, to 10.99 dollars per month in the United States for its basic subscription without , against 7.99 dollars per month with . “In our zeal to woo viewers, I think we’ve gone too far,” remarked Bob Iger, referring to prices that were too low before.
afp/br