isney stock (DIS) jumped on Thursday after the company’s latest announcement regarding revenue and earnings per share for the fiscal fourth quarter.
After Disney earnings exceeded expectations among investors, the stock surged over 6%, fueled by a profitable direct-to-consumer (DTC) business model. In mid-2024, the company announced that, for the first time ever, its streaming division became profitable.
In Disney’s fourth fiscal quarter, its DTC streaming model, which includes three of the best TV streaming services – Disney+, Hulu, and ESPN+ – reported an operating income of $321 million in the last three months. This is compared to $47 million in DIS earnings in the third fiscal quarter and to a $387 million loss in the same period last year.
The increased revenue might also be attributed to the company’s price hikes across its Disney subscription plans in mid-October.
Disney+ Basic with Ads jumped from $7.99 to $9.99, while Disney+ Premium Ad-Free rose from $13.99 to $15.99, with other plans also seeing a price increase. It seems like the only plan that was safe was Disney’s famous Duo Premium with Disney+ and Hulu Ad-Free, which remained at $19.99.
At the same time, the releases of Marvel’s Deadpool & Wolverine and Pixar’s Inside Out 2 set multiple box office records, pushing Disney earnings to a strong and comfortable level. From these two movies alone, it drove $316 million in operating income.
“In Q4 we saw one of the best quarters in the history of our film studio, improved profitability in our streaming businesses, a record-breaking 60 Emmy Awards for the company,” – stated Bob Iger, the CEO of Disney.
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Even though Netflix is seeing slower subscriber growth, Disney earnings results are proof that the business of streaming is set to become a much more profitable business than we would have expected.
According to Hugh Johnston, Disney's Chief Financial Officer, the reason behind their recent streaming success is a combination of scaling down on content spending and slow but steady growth across their DTC model. Although Netflix innovated the streaming world, Disney is shaping its future.
Disney projects that its entertainment DTC division will see an operating income increase of $875 million in the 2025 fiscal year, bringing the total to over $1 billion.
“I think we’re well-positioned if [consumers] decide to stay in linear for longer, and I think we’re well-positioned if they decide to move over to the streaming side,” – stated Johnston.
By
Andreea Iorga
•
November 15, 2024 2:00 PM
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