Disney+ ended 2023 with a net loss of 1.3 million subscribers over the last quarter, reporting 111.3 million in total, 65.2 million outside the United States and Canada, excluding Hotstar customers. The number of Hulu subscribers increased by 1.2 million to 49.7 million. The operating loss for the Walt Disney direct-to-consumer business was reduced to $138 million for the last quarter, bringing the prospect of an operating profit closer. Disney has announced that ESPN will be available as a standalone option and as part of a Disney+ bundle. ESPN channels will also be available direct to consumer as part of a new joint venture with Fox and Warner Bros Discovery to create a new online video sports service, to launch in the Autumn.
The number of Disney+ subscribers is expected to increase in the next quarter, with around 7.5 million more expected to come from its deal with Charter. However, the number of international subscribers is expected to decline slightly, because of the ending of some wholesale deals and the impact of price increases.
Disney is also following Netflix in cracking down on what it calls “improper sharing” by allowing subscribers to offer access to individuals from outside their household for an additional fee.
Revenue for the direct-to-consumer business was up to $5.5 billion in the last quarter of 2023, while that from linear networks was correspondingly down. Overall, revenue in the entertainment segment was down 7% on the previous year.
Linear networks were responsible for $1.2 billion in operating income, offset by a loss of $362 million on direct-to-consumer and licensing.
That makes a total loss on the direct-to-consumer business of nearly $11.4 billion since the launch of Disney+.
The direct-to-consumer business is expected to make a further loss in the next quarter but to reach profitability by October. It says it expects the business will ultimately be a key earnings growth driver for the company.
“Just one year ago, we outlined an ambitious plan to return The Walt Disney Company to a period of sustained growth and shareholder value creation,” said Bob Iger, the chief executive of The Walt Disney Company. “Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences.”