Disney’s Q2 earnings revealed that it is still struggling to find its footing in the new media landscape. During the quarter, the company lost $512 million from its direct-to-consumer (DTC) businesses, which include the streaming platforms Disney+, Hulu, and ESPN+.
While this loss was lower than some industry estimates, it is still a very high number and amounts to more than $10 billion lost from the DTC division since Disney+ launched in late 2019. Iger put a sunny face on the “better-than-expected losses” from DTC as evidence of progress in corporate restricting and cost-cutting. The company projects it will exceed the goal it has set of cutting $5.5 billion in costs through these efforts.
Disney CEO Bob Iger announced price hikes for subscribers to all tiers of both Disney+ and Hulu, as well as an upcoming campaign to crack down on password sharing. The cost for Hulu without ads will rise to $17.99/month, making it the most expensive major streaming service. The bundle of Disney+ and Hulu together will rise only slightly to $19.99/month. This is the second price hike of the year, and may not be the last, as Disney tries to bring in more revenues for its DTC business.
Q2 results were even darker for Disney’s “traditional” TV business, which includes cable channels such as ESPN, FX, Disney Channel, and ABC. Operating income fell 23% from last quarter and $100 million below expectations. Iger is on record as saying that the business model for Disney’s traditional TV business is “broken”, and he is looking for buyers to whom these assets can be sold. The current report only reinforces that position.
Disney’s Parks division was the one bright spot for the quarter, generating $8.33 billion in revenue which was a 13% year-over-year increase. However, this growth was centered on international parks, with attendance and revenue at Disney World in Florida declining.