Disney+ beats subscriber expectations but that growth came at a cost
By Frank Pallotta, CNN BusinessUpdated: Tue, 08 Nov 2022 21:43:37 GMTSource: CNN BusinessDisney's fourth quarter earnings were a mix of good and bad news for the company.The good: the company addBy Frank Pallotta, CNN Business
Updated: Tue, 08 Nov 2022 21:43:37 GMT
Source: CNN Business
Disney's fourth quarter earnings were a mix of good and bad news for the company.
The good: the company added 12.1 million new Disney+ subscribers, for a total of 164.2 million global subscribers, exceeding Wall Street's expectations.
The bad: Disney missed projections for other aspects of its business, including revenue And its spending to maintain its streaming business proved to be costly, as it lost $1.5 billion in the quarter. In the same quarter a year ago, the company lost $634 million.
Revenue for the quarter was $20.1 billion, up 9% from last year. Analysts, however, were expecting over $21 billion.
The results sent Disney's stock down more than 6% in after hours trading.
"The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally," Bob Chapek, Disney's CEO, said in a letter to investors on Tuesday. "We expect our [direct to consumer] operating losses to narrow going forward."
Chapek added that the streaming unit will still "achieve profitability in fiscal 2024." However, he added an important note of caution to that promise by saying "assuming we do not see a meaningful shift in the economic climate."
"By realigning our costs and realizing the benefits of price increases and our Disney+ ad-supported tier coming December 8, we believe we will be on the path to achieve a profitable streaming business that will drive continued growth and generate shareholder value long into the future," he said.