Let’s Talk About Disney’s Streaming Turnaround
Two years ago, then-CEO Bob Chapek reported Disney’s streaming losses for one quarter.
The bill came due at more than $1.4 billion, which is about the net worth of LeBron James.
(Photo by Douglas P. DeFelice/Getty Images)
When Wall Street saw those numbers, investors turned apoplectic, as did Disney’s Board of Directors.
In a matter of days, Chapek was out as Disney CEO, replaced by his old boss, Bob Iger.
Photo: AdWeek
Since then, Iger has faced an uphill climb to turn streaming into a profitable venture.
In just eight quarters, Iger has somehow achieved this seemingly impossible goal.
Photo: CBR.com
Let’s talk about Disney’s streaming turnaround, as well as some of its anchor content.
About Disney Streaming
Photo: Vecteezy
During fiscal 2024, Disney’s Direct-to-Consumer (DtC) division just lost roughly $2.5 billion.
So, everyone is jumping the gun a bit to describe what’s happening as a success.
Photo: Getty
Wall Street analysts are doing so due to a combination of two factors.
The first is Disney’s recent streaming performance, anchored by its fiscal fourth quarter results.
During July-September 2024, DtC netted $143 million. That’s not a lot of money in the corporate world.
However, when a company has been losing billions on something but suddenly turns a profit, people notice.
Photo: PepsiCo
Then, we have the second factor, which is Disney’s projection for the next fiscal year.
According to Disney’s CFO, Hugh Johnston, the company will achieve operating income of $1 billion in fiscal 2025.
Photo: PepsiCo
That’s about $250 million a quarter, which seems reasonable since Disney almost managed that during its most recent quarter.
Also, Disney has famously increased prices for its three streaming services – Disney+, Hulu, and ESPN+ — as of October 2024.
Families Streaming Disney+
Thus, the venture should prove even more profitable this year since customers are paying more.
A recent study by Macquarie Equity Research suggests that “two percent of the 12 percent overall industry streaming revenue growth came from price increases.”
Photo: English Jargon
So, in layperson’s terms, one in every six new dollars a streaming service makes are directly attributable to price increases.
Thus, Disney’s recent price hikes should impact the bottom line significantly.
Photo: Getty Images/Ringer illustration
When Iger introduced Disney+, he made no secret of the fact that it’d be a loss leader.
In fact, some of us signed up for three full years of service for about $140, which is less than $50 a year.
Not coincidentally, Disney couldn’t turn a profit at that rate. Now, the same services cost about $25 a month, and it’s profitable. Go figure.
Disney Consolidates
Photo:cnet.com
One of the integral components of Disney streaming is that it’s all interconnected.
Less than a year ago, Disney+ added a Hulu tile, which became permanent in 2024.
Photo: Deadline
In December, Disney+ will introduce an ESPN+ tile, thereby providing everything in the Disney Bundle in a single app.
The idea is for Disney to consolidate all its multiple generations of content into a single resource, one for which subscribers will happily pay.
Photo: Disney+
Disney desires a one-stop location for all media consumption. To achieve that goal, it has acquired all of Hulu.
Also, ESPN has locked up so many live sports broadcast rights that it’s literally trading them for other entities.
Image Credit: ESPN
For generations now, fans have expected to find Disney content everywhere from ABC to ESPN to Freeform to the Disney Channel.
Moving forward, fans will do the opposite. They’ll load Disney+, and it’ll feature everything Disney owns/licenses.
Photo: Disney+
I’m not even joking. Fans can choose between classic Disney animated movies, new Marvel and Star Wars shows, and even live sports.
We’d be speculating to suggest how well live sports will look and work, but we’ll find out in only three weeks.
Photo: ESPN
Hopefully, this part of the app works better than the Netflix Mike Tyson fight.
The point is that Disney is creating its own media consumption universe with Disney+, and those plans are working shockingly well.
Photo: Forbes
In fact, Disney just reached a “tipping point” wherein its streaming gains offset its drop in operating income in Linear Networks.
That’s been the company’s stated goal for DtC since the announcement of Disney+.
Photo:Ivan Marc / Shutterstock.com
In short, Disney has weathered the storm of cord-cutting.
About Disney’s Anchor Content
Wall Street Journal
Still, for Disney to maintain its current position in the marketplace, it needs streaming hits.
So, let’s quickly glance at the Nielsen Streaming Ratings for the week of October 14th-20th, 2024.
Photographer: Pavlo Gonchar/SOPA Images/LightRocket/Getty Images
For the week, Disney claimed half the top ten hits overall. Those titles include:
- Bob’s Burgers – 945 million viewer minutes
- Bluey – 926 million viewer minutes
- Lost – 827 million viewer minutes
- Family Guy – 808 million viewer minutes
- Grey’s Anatomy – 717 million viewer minutes
Credit: ABC
As a reminder, Disney shares Lost and Grey’s Anatomy with Netflix. The other three titles are Disney+/Hulu exclusives.
We haven’t talked about it much lately, but Bluey continues to be the most streamed program of 2024 to date.
Photo: Hulu
On the Originals chart, Disney claims two titles. Only Murders in the Building managed 438 million viewer minutes.
Meanwhile, Agatha All Along charted again with 410 million viewer minutes.
Photo: Getty
The show still had three episodes remaining at this point. Next week’s ratings will be for the mythic seventh episode of the season.
On the Acquired chart, Hulu also claims Law & Order: Special Victims Unit, which managed another 549 million viewer minutes.
Image: Pixar
So, you can tell that Hulu has many reliable anchor programs that fans binge-watch repeatedly.
Finally, on the Movies chart, Inside Out 2 fell to 386 million viewer minutes.
Image: Pixar
It doesn’t appear to be as rewatchable as some other recent Disney animated titles.
Conversely, Tim Burton’s The Nightmare Before Christmas worked its magic with another 244 million viewer minutes.
Nightmare Before Christmas Poster
Fans simply cannot get enough of this one, which is what Disney wants from the catalog titles in its content library.
Overall, Disney’s streaming strategy is working VERY well.
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