Disney Sees Streaming Losses Shrink Despite Disney+ Subscriber Decline

Ever since Bob Iger returned as the head of Disney, he’s orchestrated a massive restructuring push aimed at getting power back into the hands of creatives and getting the company’s finances in order. No place has that been more pronounced than in the House of Mouse’s streaming division. Thanks to cost-cutting measures, the company reported fewer losses on its direct-to-consumer front even as Disney+ subscribers took a downturn of late.

During their Q3 earnings call, the company saw $512 million in streaming losses which was vastly improved upon where it had been earlier this year. Q1 had the streaming division $1.1 billion in the red while Q2 improved to $659 million in losses. Most importantly, Disney beat the projected $777 million loss, continuing a positive trend as Iger continues to push the company toward profitability. It’s not all positive as the $22.3 billion total revenue fell short of estimates and linear television flagged with a 23% decrease in profit to $1.9 billion for the company, but mitigating losses was certainly something praiseworthy in the CEO’s eyes.

Iger’s goal of achieving $5.5 billion in savings seems well within reach now because of Disney’s efforts too. The price to get to that point wasn’t exactly cheap or popular though. A hefty portion of the savings came from a massive content purge back in May which saw Willow, Big Shot, and more removed from Hulu and Disney+ all in the name of saving on residuals and taking on a $1.5 billion impairment charge this quarter that would benefit them as a tax write-off. That move understandably earned the ire of creators aboard the shows whose content was now locked away with no legal way to watch it outside whatever legitimate physical media there is. In total, that charge ballooned to $2.44 billion when including other removed content and terminated services from the house that Walt built. Around the time of the purge, the company also cut 7,000 jobs to further streamline things.

Disney+ Subscriber Loss Was Grim, But Understandable

Regarding actual subscribers, Disney+ saw a serious dip this quarter, falling to 146.1 million total subscribers globally at the end of June. That sounds grim, especially in the wake of serious subscriber losses in the previous two quarters of this year which had implications for the entire streaming landscape. Granted, this loss has a more digestible explanation for shareholders. The Indian brand Disney+ Hotstar is responsible for 12.5 million losses on its own which were expected after the company declined to continue carrying Indian Premiere League cricket games. Core Disney+ members actually grew to 105.7 million compared to 104.9 million.

Iger expressed optimism about where Disney was heading in the context of these numbers, saying in a statement:

“Our results this quarter are reflective of what we’ve accomplished through the unprecedented transformation we’re undertaking at Disney to restructure the company, improve efficiencies, and restore creativity to the center of our business. 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. While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we now have in place, and because of Disney’s core foundation of creative excellence and popular brands and franchises.”

There’s hope within Disney that profitability can come sooner rather than later with new changes to pricing too. During the earnings call, Iger announced that prices would generally be raising across the board for the Disney bundle with hopes of pushing more subscribers toward bundles and ad-supported plans. He’s also looking to follow in Netflix’s footsteps and begin a password-sharing crackdown starting in 2024. These aren’t the most popular moves – and it’s hardly the best timing amid the strike – but Iger is still playing for business as Disney still has serious problems to solve.

Stay tuned here at Collider for more on the future of Disney’s streaming strategy.