Disney reports fiscal third quarter earnings.
Recently, Disney reported its fiscal third quarter numbers, and announced many upcoming changes to its diverse portfolio. Disney Plus saw its domestic subscriber base shrink by around 300k users for the second straight quarter, to about 46M subscribers, while losses were trimmed by about 50% to -$512M. The company also announced that subscriptions to its ad-supported plan totaled about 3.3M, and comprised about 40% of new subs. With this report, CEO Bob Iger announced another price increase (in October), after a similar increase last December. In an effort to move people into the ad-supported plan (where revenues are higher), the ad-supported plans will remain unchanged, while the ad-free tiers will go up by about $3-4 each. Bundles that combine Hulu and Disney (and ESPN+) will follow a similar rate increase structure, leaving the ad-free tiers unchanged. Hulu grew by about 100k subs to 48.3M, while Hulu + Live shrank by about -100k to 4.3M (although up about 300k year over year). Looking forward, Iger welcomed the final buyout of Hulu from Comcast, as well as spinning off a streaming version of ESPN, and a password-sharing crackdown in 2024.
The Circana Take:
- Revenue losses continue to decrease, signaling that the recent cost-cutting measures seem to be working. With goals of profitability in the coming fiscal year, price increases risk some churn, but Disney’s brand power and original content slate should diminish some of those concerns.
- Sports continues to be a market inflection point between cord-cutting and streaming, as no streamer has figured out live sports… yet. But if anyone can lean into the problem, it will be ESPN.
Paramount posts successful quarter.
Q2 results are in for Paramount, and results were positive, beating Wall Street estimates on many metrics. Overall losses were down about 4% to -$424M, and the media powerhouse is on track to lose less than the forecasted $2B. For Paramount+, subscriptions were up by 700,000, beating estimates. The Paramount+ user base now totals about 61M. Streaming revenue was up 40% to $1.165B, and, in combination with FAST/AVOD platform PlutoTV, total hours was up 35%. Total revenue was down 2.5% to $7.6B, down from $7.8B. Looking to the future, CEO Bob Bakish described bundling [Paramount+ with other services] as, “part of our strategy.”
The Circana Take:
- The early days of streaming were about differentiation in the marketplace. Now that many services have a foothold, joining forces may create growth-oriented synergies.
- It’s interesting that the two streamers that are now combined (Paramount+ with Showtime and Max, which combined HBO Max with discovery+) are the two companies that have publicly stated a willingness to bundle their services with others. Is consolidation the next phase in the streaming landscape?