Disney executives reported robust second quarter 2023 financials however Disney+ global subscriptions fell by four million for the second quarterly drop in a row.
The global Disney+ offering including Hotstar dropped 2% in the quarter ended April 1 2023 to 157.8m compared to 161.8m in the previous quarter, well below Wall Street forecasts of around 163m.
Disney+ North American membership dropped 300,000 or 1% from 46.6m to 46.3m, while international excluding Disney+ Hotstar gained 900,000 or 2% from 57.7m to 58.6m in the quarter.
Crucially streaming segment revenues for the quarter climbed 12% year-on-year from $4.9bn to $5.51bn and losses declined by 26% from $887m to $659m.
Average revenue per user for Disney+ climbed 20% over the last quarter to $7.14 in North America and gained 6% to $5.93 for international users excluding Hotstar.
Disney COO Christine McCarthy told analysts in the earnings call on Wednesday that the company will produce less content for streaming and will remove select content from its platforms to increase profitability.
CEO Bob Iger added the company will increase its ad-free subscription fees and keep the advertising tier where it is for now.
Hulu membership climbed 200,000 to 48.2m. Iger said that Disney+ would carry Hulu content under one app later this year for customers who subscribed to both platforms. This suggests that Disney wants to keep Hulu. In 2024, Disney can force Comcast to sell its ownership stake. In 2024 Disney can force Comcast to sell its ownership stake.
Overall Disney revenues for the quarter exceeded analysts’ forecasts to climb 13% over the year-ago quarter from $19.25bn to $21.82bn, while diluted earnings per share fell 14% from $1.08 in the year-ago quarter to 93 cents in the quarter, roughly on track with Wall Street forecasts.
The solid Disney Parks, Experiences and Products revenues gained 17% year-on-year from $6.65bn to $7.77bn, and operating income climbed 23% from $1.76bn to $2.17bn.
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