Disney+ Experiences Subscriber Decline of 700,000 Towards the Year's End in 2024
Disney's meteoric growth seems to have hit a speed bump recently. Shares of the company dipped slightly on a Wednesday post-earnings reveal, revealing a loss of 700,000 subscribers for Disney+ in Q4 2024. Disney+ now boasts 124.6 million subscribers, a decrease from its previous 125.3 million. Hulu, on the other hand, saw a surge of 1.6 million subscribers, reaching 53.6 million.
Financially, Disney performed better than anticipated, posting earnings per share of $1.76 on revenue of $24.7 billion. Wall Street analysts had projected $1.43 EPS on $24.55 billion revenue. Disney's theme parks noticed a significant upward swing in revenue, an area other streamers usually lack.
Bob Iger's return as CEO in 2022, driven by his inability to relinquish control, led him to set an ambitious aim for Disney+ - to become profitable by the end of 2024. Successfully meeting this goal resulted in three consecutive quarters of streaming profitability for Disney+.
However, Disney+ has faced criticism from fans for its perceived content oversaturation and quality dilution. As a result, Iger announced in his return that Disney would cut back on content production to improve overall quality and profitability. This change in strategy has been met with mixed reactions from investors.
Meanwhile, Netflix continues to lead the streaming industry with a staggering 300 million subscribers, adding another 19 million in Q4 2024. This resilient growth can be attributed to its more substantial content library and lower churn rates. In contrast, Disney+ faces a higher churn rate, exacerbated by Disney's focus on children's and teen content and a hefty 40% spend on sports rights.
Despite these challenges, Disney continues to dominate the children's entertainment industry and has enjoyed success with releases like new blockbuster movies in 2024. Its theme parks also serve as a lucrative flywheel, reinforcing the popularity of its other services.
In the face of this decline, ESPN+ appears to be a potential bright spot for Disney.
Enrichment Insights:
- Price Hikes: Following its October 2024 price increase, Disney+ subscribers have displayed a tendency to cancel, partly contributing to the Q4 subscriber loss[1][2][3].
- "Paid Sharing" Plan Intro: Disney's September 2024 introduction of its "Paid Sharing" plan, restricting account usage to a single household, led to an increase in churn among subscribers who used to share accounts across various households[2].
- Market Saturation: The global streaming market has become increasingly saturated, leading to decreased new subscriber acquisition and increased churn in regions like North America and Western Europe[4][5].
- Content Strategy: Disney's focus on English-language content exportation, rather than local language content development, is why companies like Netflix and Amazon Prime Video have outperformed Disney in key international markets[4].
Despite the temporary setback, Disney remains optimistic about the role of technology and 'tech' in shaping its future. Iger believes that innovations in streaming platforms and content production will help Disney+ regain its momentum and meet its profitability goals.
In light of the competitive landscape, Disney is exploring ways to boost revenue from services like ESPN+, emphasizing the importance of diversifying its 'future' streaming strategies.
