How Well Is Disney’s Streaming Strategy Working?
The past two weeks proved critical to the future of Disney’s streaming services.
The Walt Disney Company just announced the new name for its upcoming sports service and the release dates for some Hulu titles.
Walt Disney Company
Most importantly, Disney revealed its financial data for the first six months of fiscal 2025.
So, this seems like a good time to answer a vital question. How well is Disney’s streaming strategy working?
Why This Matters
Photo: skillastics.com
I doubt you’ve forgotten, but I’ll quickly point out that Disney just started spending $30 billion to improve its American theme parks.
Effectively, Disney has committed $1.5 billion per year each to Disneyland and Walt Disney World.
Photo: Washington Post
While Disney filed the paperwork for expansion with the SEC and has broken ground at the parks, the situation remains a bit tenuous.
Disney’s filing includes several asterisks, basically escape clauses if the economy collapses, which nobody wants, but it does happen at times.
Walt Disney Company
In that worst-case scenario, Disney would finish the projects it has started, but it’ll probably reduce the plans somewhat.
More importantly, any projects that haven’t started yet will go on hiatus, and history suggests some of them will never be built.
Photo: Wikimedia
That’s why I, a huge theme park fan, sweat every detail of Disney’s finances…and why I’ve been smiling a lot lately.
Disney’s fiscal second quarter earnings report represented an inflection point for the company.
Many critics believed that Disney would report terrible revenue, and they were prepared to wreck the stock, which had already fallen into the $80s.
That’s the same level where the stock stood when activist investor Nelson Peltz tried to force his way onto Disney’s Board of Directors.
Photo: restorethemagic.com
Nobody who likes Disney wants that. So, we all held our breath right up until Disney reported spectacular numbers.
Seriously, I’ve been reporting on Disney earnings here for eight years now, and this was legitimately one of the best quarters ever.
Photographer: Patrick T. Fallon/Bloomberg via Getty Images
Disney defied expectations across the board, reporting earnings growth in every core business, most notably streaming.
Streaming by the Numbers
Forbes
To understand Disney’s current status, we must look back to a couple of years ago just to appreciate the improvement.
For the same quarter in 2023, Direct-to-Consumer (DtC), Disney’s streaming segment, reported losses of $659 million for the quarter.
NPR
Here’s the scary part. That number reflected an improvement of $228 million from the prior year.
Why was the number terrible yet somehow better than before? Bob Iger had returned as CEO, chasing off Bob Chapek in the process.
Photo: Walt Disney Company
Chapek’s streaming strategy boiled down to, “Spend! Spend! Spend!” That would have been fine if it were working, but it wasn’t.
Streaming wasn’t making much money in terms of average revenue per user (ARPU), partially because of a drag on earnings due to Star India/Hotstar.
Photo: Patrick T. Fallon/Bloomberg
At the time, the total was a woeful $4.44, the lowest among major players in the streaming industry.
Iger quickly identified the weaknesses and took steps to address them, one of which required a brutal financial loss.
Hotstar merged with its biggest competitor in India. At a minimum, Disney took a 70 percent loss on the previous value of Hotstar, and some would say 90 percent.
Bold decisions like this one have paid dividends, though. As proof, Disney+ has improved its ARPU to $7.77, a 75 percent improvement in two years.
Photo:amplitude.com
The remarkable part is that DtC revenue hasn’t grown by as much as you may think.
In the second quarter of 2023, DtC earned $5.514 billion compared to $6.118 billion in the most recent quarter.
Families Streaming Disney+
That’s growth of 11 percent in two years or 5.5 percent annually. It’s fine, but it’s nothing special.
What Disney has managed instead is to cut costs and spend more wisely, something that the notorious penny-pincher, Chapek, was surprisingly bad at doing.
Disney Streaming in 2025
Photo: Disney
The question becomes where Disney goes from here with its streaming empire, and the compass is clearly pointing north.
As I referenced, Hulu just announced an absolute juggernaut of a summer slate.
Photo: Hulu
We’re getting new episodes of The Bear, possibly the final ones, next month. Then, Alien: Earth lands and redefines serial horror.
Disney Entertainment Co-Chairman Dana Walden has masterfully greenlighted and then scheduled the ideal amount of streaming content.
Photo: Hulu
Disney is actually spending $10 billion less on content than it had been during Chapek’s tenure.
Nobody notices because the “quality, not quantity” strategy is working.
Photo: Disney
Now, everyone in television has been saying that very phrase since the 1950s. It’s no different than when programming was in black & white.
The difference is that Walden possesses one of the best batting averages for content production of anyone in the history of this industry.
Hollywood Reporter PHOTOGRAPHED BY DIANA KING
Even now, she has lined up another show from her buddy, Ryan Murphy, that stars – and I can’t believe I’m typing this – Glenn Close and Kim Kardashian.
I don’t know what this is, but I wouldn’t be shocked if it becomes a hit. It falls into the bucket of being so out there that I can see it succeeding.
JON KOPALOFF/GETTY IMAGES
Shows like this embody Walden’s daring bravado and willingness to try bold ideas, ones likely to become part of the zeitgeist.
Currently, Walden has mastered the art of programming Hulu in combination with the linear networks: ABC and Disney’s cable channels.
(Photo by Steve Granitz/WireImage)
Her signal-to-noise ratio isn’t as good with Disney+, but Bluey covers a lot of mistakes. Plus, Disney+ will enjoy afterglow indefinitely.
Still, there is one remaining component to Disney’s streaming plans, and it’s arguably the most important one.
ESPN Flagship
Photo: ESPN
Disney recently revealed details about its upcoming streaming service, which we have previously known as ESPN Flagship.
Disney executives reportedly debated this name ad infinitum before ultimately settling on…ESPN.
Yeah, it’s funny, so much so that Disney owes a debt of gratitude to Warner Bros. Discovery.
That company infamously reduced the name of HBO Max to Max two years ago as it tried to move away from the HBO brand.
Photo: HBO
What happened next? HBO proved itself as the only content people cared about on the service. So, WBD just switched the name back to HBO Max.
Naming streaming services is apparently the hardest part other than turning a profit.
Photo: HBO Max
But here’s the thing. DtC just turned a profit of $336 million. Disney is making almost exactly $1 billion more than just two years ago.
Do you know what would perfect its streaming lineup? The answer is a graceful introduction of ESPN as a streaming service.
Photo: ESPN
Currently, ESPN marks the last remaining tether to linear television. Disney hopes to walk a fine line here.
The plan for ESPN involves a two-pronged existence for the next few years. Cable television is dying, but it’s like AOL. It’ll be dying for a quarter-century.
Photo: ESPN
In the interim, Disney plans to keep selling ESPN to cable carriers at premium rates while persuading subscribers to spend $29.99 for the same product on streaming.
Many media analysts like myself are VERY curious about this endeavor, which has never been attempted on this scale before ESPN.
Photo: Disney
So, while Disney streaming stands tall right now, it still has one more gigantic hurdle to clear.
A smooth launch secures Disney’s financing during its decade of theme park expansion.
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