Disney chief executive Bob Chapek defended the spending strategy, saying the rapid growth of Disney Plus was “a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally”.
He added that streaming losses would begin to “narrow”, with Disney Plus expected to turn its first profit in 2024, barring a “meaningful shift” in the economy.
Disney will raise the price of its streaming services and introduce a new advertising-supported tier to Disney Plus next month — steps that Chapek said would lead to a “profitable streaming business”. Netflix, which has experienced a slowdown in subscriber growth, launched an ad-supported service last week.
Christine McCarthy, Disney chief financial officer, said “peak losses are now behind us” with relation to streaming, noting the price increases and advertising-supported service would begin to have a financial effect early next year. Content spending and other costs would slow in 2023, she added.
Disney’s theme parks continued to rebound from their coronavirus pandemic lows in the quarter. Operating income at the theme parks more than doubled to US$1.5b, and revenue rose 36 per cent to US$7.4b despite the impact of Hurricane Ian.
McCarthy said the company’s US theme parks division took a US$65m hit from the hurricane, which struck Florida in late September and temporarily closed Walt Disney World.
McCarthy added Disney’s US parks were making more money than before the pandemic, with per capita spending nearly 40 per cent higher than in 2019. The parks are also experiencing an influx on international visitors that is close to pre-pandemic levels.
But she said Disney’s park in Shanghai, China has been closed and the company has “no visibility on a reopening date”.
Written by: Christopher Grimes
© Financial Times