Disney on Wednesday reported gaining nearly 7 million core Disney+ subscribers – the vast majority coming from international markets – alongside revenue gains and narrowed operating losses for its direct-to-consumer segment.
In its domestic market of U.S. and Canada Disney+ added 500,000 subscribers in the fourth quarter of its fiscal year 2023, increasing its tally to 46.5 million. That’s an improvement from the 300,000 domestic Disney+ subs it lost in its fiscal Q3. Internationally (excluding Disney+ Hotstar in India) gains were more substantial, as the company added 6.4 million Disney+ subscribers for an international base of 66.1 million.
As for Hulu (which Disney recently confirmed plans to buy out the remaining 33% ownership stake in from Comcast), the SVOD-only service saw modest subscriber losses of 100,000 compared to the prior quarter for a base of 43.9 million. Its virtual MVPD Hulu+ Live TV, meanwhile, added 300,000 subs for a total of 4.6 million. ESPN+ also saw sequential subscriber gains, adding 800,000 for a total of 26 million at the end of the period.
Direct-to-consumer revenue grew 12% year over year to $5.04 billion. Disney was also able to narrow DTC operating losses substantially year over year, reporting a $420 million loss versus a $1.4 billion loss in the same period a year ago. It attributed the decrease to higher subscription revenue thanks to price increases and subscriber growth for both Disney+ and Hulu, alongside lower marketing, technology and distribution costs.
Breaking out its sports business, Disney reported domestic ESPN revenue growth of 1% year over year to $3.45 billion.
When combining ESPN+ and its other streaming business, total DTC streaming revenue was up 13% from a year ago to $5.55 billion, while operating losses trimmed to $387 million.
Higher advertising revenue helped increase domestic Disney+ average revenue per user (ARPU) to $7.50, a 3% year over year increase. However, ARPU declined 2% year over year for the Hulu SVOD-only product and Hulu Live TV + SVOD, to $12.11 and $90.08, respectively. Disney attributed lower Hulu SVOD ARPU to less advertising revenue and more subscribers taking multi-product offerings, while lower ad revenue also dragged down ARPU at the vMVPD.
Linear networks were also impacted by lower advertising revenue, primarily at ABC and owned TV stations, which Disney attributed to fewer impressions due to lower average viewership as well as less political advertising revenue. Linear networks revenue declined 9% year over year to $2.6 billion. Disney’s Content sales and licensing also declined, dropping 3% year over year to $1.86 billion. Despite linear and licensing declines, the DTC business helped buoy revenue for the overall entertainment segment, which was up 2% yoy to $9.5 billion.
Total Disney revenue was up 5% yoy in the period to $21.2 billion. That includes a 13% increase at in Disney’s Experiences segment, which includes theme parks and consumer products, contributed $8.1 billion in revenue in the quarter, up 13% year over year.
With restructuring and cost-cutting initiatives taken in 2023, including cutting 7,000 jobs globally, Disney CEO Robert Iger in a statement said the company is “on track to achieve roughly $7.5 billion in cost reductions.”
“As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences business,” Iger continued. “We have already made considerable advancements in these four areas and will continue to move forward with a sense of purpose and urgency, and I’m bullish about the opportunities we have before us to create lasting growth and increase shareholder value.”