Disney+ lost some subscribers in the second quarter of 2023 but mainly through Hotstar. More significantly, the company has lost a total of $3.7 billion on direct-to-consumer services over twelve months, but revenue is rising and the losses are getting less. Disney is promising to turn a profit on online video by late 2024, partly by increasing prices.

In the second quarter of 2023, the Walt Disney Company lost $512 million on direct-to-consumer services, including Disney+. That was less than the loss of $659 the previous quarter, and a loss of over a billion dollars in the last three months of 2022.

Overall, Disney reported a net quarterly loss of $460 million on revenue of $22,330 million, after restructuring and impairment costs of $2.65 billion.

Disney still makes more from its linear television networks than its global online video business, although down 7% to $6.7 billion compared to the previous year, and it continues to generate cash. However, revenue from international channels was down by 20% and they made a loss. Disney still needs programming to fuel its direct-to-consumer businesses, not least Hulu, but is considering its strategic options, saying it is looking for partners to help transition ESPN to go direct to consumer.

Disney DTC revenue 2023 Q2. Source: informitv / company reports

Disney expects to see future growth coming from its movie studios, entertainment parks and cruise ships, and online video.

Bob Iger, who returned to Disney as Chief Executive in November 2022, said: “In the eight months since my return, these important changes are creating a more cost-effective, coordinated, and streamlined approach to our operations that has put us on track to exceed our initial goal of $5.5 billion in savings as well as improved our direct-to-consumer operating income by roughly $1 billion in just three quarters.”

At the end of the first half of 2023, Disney+ had 46 million subscribers in the United States and Canada, 40.4 million through Hotstar, and 59.7 million others internationally. Since the launch of a pricing tier with advertising in some markets, the company says that is being chosen by 40% of new subscribers, although that is only 3.3 million so far. Disney is planning to extend the advertising option to selected markets in Europe from November. It will also follow Netflix in cracking down on account sharing.

Disney+ subscribers 2023 Q2. Source: informitv / company reports

Hulu had 48.3 million subscribers, a marginal increase, including 4.3 million paying an average of $92 a month to subscribe to the Live TV package, which was down by about 100,000.

ESPN+ had 25 million subscribers, down only slightly on the previous quarter. Disney says that taking its ESPN flagship channels direct-to-consumer is just a matter of time.

Asked whether there was an option to sell the whole Disney operation to a technology company, Bob Iger refused to speculate, adding, “anyone who wants to speculate about these things would have to immediately consider the global regulatory environment.”