Disney+ Adds 12 Million Subscriptions but Mixed Q4 Results Signal Streaming Fatigue

The House of Mouse’s fourth-quarter revenue and earnings per share missed expectations

Disney Earnings
Photo illustration by TheWrap

The Walt Disney Co., the world’s largest entertainment giant, reported on Tuesday that fourth-quarter results came in below where Wall Street expected, showing signs of streaming subscription fatigue.

The conglomerate reported a profit of 30 cents a share on revenue of $20.15 billion, while streaming subscriptions hit 164.2 million, during the quarter. But there are concerns about whether the industry Goliath can gain enough subscribers to subsidize the cost of streaming content — especially in a period where Disney is predicting profitability in 2024.

Disney, which has been in a back-and-forth battle with Netflix for the title of world’s biggest streaming platform, was expected to post a profit of 54 cents per share for the three months ending in September, a 46% increase from last year, on revenues of $21.247 billion.

Disney+, which was expected to rise by 8.9 million, added more than 12 million streaming subs, which hit a record 152.1 billion last quarter. That was down from the 14.4 million added over the three months ending in June.

“Our fourth quarter saw strong subscription growth,” said chief executive Bob Chapek in prepared remarks. “The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally, and we expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate.”

The market is already digesting the numbers. Shares have already tanked 6% in after-hours trading as the direct-to-consumer strategy is taking longer than expected.

Hulu had 47.2 million subscribers and ESPN+ had 24.3 million. But, combined, Hulu, ESPN+ and Disney+ have over 235 million streaming subscribers. That makes them the leader in the streaming space, versus 223 million subscribers at Netflix.

The direct-to-consumer division is set for a price hike in December, and an ad-supported tier is expected to boost revenue.

The Parks, Experiences and Products division, which includes the company’s theme parks, resorts, cruise line and merchandise business, saw revenue increase more than 34% to $7.4 billion during the quarter. Still, Wall Street had slightly higher hopes for the division: Analysts were expecting parks revenue of $7.5 billion, according to StreetAccount.

Operating income for the division rose more than 66% to $1.5 billion as spending increased at its domestic and international parks. The parks snagged $815 million in operating income, shy of the $920 million expected by StreetAccount.