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Disney+ Added a Lot of Subscribers and Lost a Lot of Money in Q4

Disney's core streaming service now has 164.2 million subscribers after adding 12.1 million in the final quarter of its fiscal year. But it came at a cost.

A tall woman with wavy black hair and green skin standing on a beach; still from "She-Hulk: Attorney at Law"

“She-Hulk: Attorney At Law”

Marvel Studios

Disney ended its 2022 fiscal year by adding 12.1 million subscribers to Disney+, bringing its overall subs tally to 164.2 million in Q4 and smashing analyst estimates. At least, it smashed those analyst estimates.

Counting its other streaming services, Hulu and ESPN+, the company reached 235 million total subs — that widens the gap between Disney (overall) and Netflix, which finished the July to September quarter with 223 million global paid subscribers. Disney got to its new number at a great expense: DTC (direct-to-consumer) lost $1.5 billion in the quarter.

In the previous quarter, fiscal Q3 for Disney, the core streaming service added 14.4 million subscribers and posted an operating loss of just $1.1 billion. In a prepared statement accompanying Disney’s 2022 results, CEO Bob Chapek reiterated the expectation that Disney+ will become profitable in fiscal 2024. The ad-supported tier of Disney+, which rolls out one month from today, should help.

Analysts had predicted Disney+ would add roughly 8.8 million subs for the quarter that ended on September 30, 2022, but it went well above that mark on the backs of excitement for new series like “She-Hulk: Attorney at Law” and “Andor,” as well as longstanding broadcast hit “Dancing With the Stars,” which danced a jig over from Disney’s ABC. The smash-hit film “Hocus Pocus 2” even debuted right at the tail end of the quarter, likely goosing some subscriber totals.

The vast majority of this quarter’s growth at Disney+ came outside of the U.S. and Canada, as just 2 million of those 12.1 million new subscribers came domestically. Disney, like, Netflix, is almost fully matured in what is known as the UCAN region.

Hulu closed out the fiscal year with 47.2 million subs, while ESPN+ individually finished Q4 with 24.3 million; those two along with Disney+ make up the Disney Bundle. Chapek has previously stated his goal of reaching between 230 million and 260 million global Disney subscribers on its platforms by September 2024.

For the quarter, The Walt Disney Company posted a revenue of $20.15 billion and adjusted earnings of 37 cents per share, whiffing on Wall Street estimates of $21.25 billion in revenue and earnings of 56 cents per share. Disney’s Q4 profit was $162 million, pretty flat with fiscal Q4 2021. Fortunately, the early part of fiscal 2022 fared better.

“2022 was a strong year for Disney, with some of our best storytelling yet, record results at our Parks, Experiences and Products segment, and outstanding subscriber growth at our direct-to-consumer services, which added nearly 57 million subscriptions this year for a total of more than 235 million,” Chapek said in his statement. “Our fourth quarter saw strong subscription growth with the addition of 14.6 million total subscriptions, including 12.1 million Disney+ subscribers. The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally, and we expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate.”

“By realigning our costs and realizing the benefits of price increases and our Disney+ ad-supported tier coming December 8, we believe we will be on the path to achieve a profitable streaming business that will drive continued growth and generate shareholder value long into the future,” his statement continued. “And as we embark on Disney’s second century in 2023, I am filled with optimism that this iconic company’s best days still lie ahead.”

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