Hey, Disney Almost Broke Even from Streaming

Disney+ is back on a growth trajectory, thank goodness. Even better? Disney+ is darn close to actually making money.

After an October 2023 price hike, the core Disney+ service lost 1.3 million subscribers. Not this time. From January-March 2024, it added 6.3 million subscribers — and its ARPU (average revenue per user) increased by 44 cents. Disney+ now has 117.6 million subs, not counting Disney+ Hotstar. More than half of those are outside of the U.S. and Canada.

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In February, Disney predicted Disney+ (again not counting Hotstar) would add between 5.5 and 6 million subs from January to March. Underpromise/overdeliver: always a solid strategy in business.

Disney’s direct-to-consumer (DTC) business lost just $18 million in the quarter, which for the company is its fiscal second quarter of 2024. Last quarter, the loss was $138 million. Disney CEO Bob Iger has previously said Disney+ will be profitable by the final quarter of the company’s fiscal-year 2024 — so, by September 30, 2024 — a timeline he reiterated on Tuesday. We’re getting so close!

As a matter of fact, Disney’s “entertainment streaming was profitable,” from January to March of this year, per Iger. That (likely) means Hulu profits offset Disney+ losses — but losses from streaming sports more than offset all of that. We’re looking at you, ESPN+.

Hulu, the next-largest piece of that DTC business, added 500,000 subs in Q2. Hulu is continuing its integration into Disney+, though we have yet to learn how much more money Disney owes Comcast for its former one-third stake in Hulu. (Disney has already paid about $8 billion toward the sum, but Comcast argued its Hulu stake was worth much more than that.)

ESPN+ lost 400,000 subscribers in the March quarter. We are still awaiting a name and a price point for the announced joint-venture sports-streaming service from Disney, Fox, and Warner Bros. Discovery. It is supposed to launch in the fall, and will be independent of ESPN+.

Hotstar, India’s version of Disney+, has faced a rough road ever since it lost key cricket rights. Disney+ Hotstar now has 36 million subscribers; it lost 2.3 million subs in the recent quarter.

Disney outperformed Wall Street’s financial forecasts for the quarter, but that fact alone could not stop the stock (DIS on the NYSE) from falling pre-market. The pessimism stems from this piece in the Disney earnings release: “We are expecting softer Entertainment DTC results in Q3 to be driven by Disney+ Hotstar.” Perhaps on the company’s 8:30 a.m. ET conference call Iger can assuage shareholder concerns.

Due to last year’s writers and actors strikes, Disney’s fiscal Q2 theatrical slate looked like reruns. It filled movie screens with the belated theatrical debuts of COVID-era Pixar animated flicks “Soul,” “Turning Red,” and “Luca” (pictured above) which were (or became) streaming exclusives.

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