Disney Poised to Win the Streaming Profitability Race

 With Netflix the only streamer operating fully in the black, there has been much speculation about which streaming platform will be the first to break into true profitability, with many believing we will see this happen by the end of this year. As many have predicted, it seems Disney+ may be on the verge of taking this streaming milestone. Brandon Blake, our entertainment attorney Los Angeles at Blake & Wang P.A., breaks down the facts and figures.

 


Brandon Blake

Significantly Reduced Streaming Losses

For Q1 of 2024, which is Disney’s fiscal Q2, Disney’s combined streaming business, which now included sole ownership of Hulu as well as ESPN+, managed to reduce their losses to only $18M. While subs rose significantly, average revenue per user did slip a little. This is mostly thanks to growth from their recent deal with Charter, which introduced some reduced, wholesale pricing to the mix. Revenue came in at $6.2B.

Surprisingly, if we remove ESPN+’s sports-focused streaming from that, they technically already made a profit, with a revenue of $5.6B and a net profit of $47M. ESPN+ is, however, expected to be bundled with the Disney+ platform by the end of the year.

Stormy Quarter Ahead

Despite those positive numbers, Disney did warn that its Q3 will be less predictable, primarily due to the changes made around Disney+ Hotstar in India. Once we pass that barrier, however, they expect their fiscal Q4, which will be Q3 of 2024, to be fully in the black. Perhaps more importantly, they expect it to stay there thereafter, too.

This comes at a time when Disney’s linear business saw a 7% revenue decrease and an 18% decrease in their operating income, driven partly by the removal of some channels from their Charter deal and the soft linear market.

Without a major upset in the streaming arena in the coming months, this makes it increasingly likely that Disney will take that coveted title of the first streaming platform to reach full profitability, a milestone for the wider entertainment space as well as the company itself.

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