“Streaming, which, let’s face it, is really the future of the television business,” is what Disney’s CEO Robert A. Iger said during the company’s latest earnings call.
The Walt Disney Company is the world’s leading mass media and entertainment conglomerate, earning it the number-one spot among ‘The Big Six’ in media. Although Disney was founded over 100 years ago, it continues to be profitable in nearly all aspects of its business.
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Over the last few years, streaming services have risen in popularity due to the massive amount of content they offer, such as movies, on-demand shows, and now even live television, all contained on a single platform.
Today’s society is all about convenience. That’s what makes streaming services far more enticing than struggling to find channels on cable television and potentially missing a favorite TV show because of scheduling issues. This has taken viewers away from traditional cable television providers, who have increasingly struggled to get people to continue consuming their shows.
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Because Disney is an expert in multimedia, the company saw the huge potential and massive monetary gains that entering the streaming service industry could bring to its business and was quick to develop its own.
In 2019, Disney launched its streaming service Disney+ in the U.S., and since then, it has grown consistently, constantly gaining subscribers. Its quick success and fans’ demand for the service later pushed it to expand to other countries, gradually increasing its awareness and gaining even more subscribers.
Walt Disney Co. CEO Bob Iger acknowledged streaming is the future.
Disney delivers a strong quarter but one sector sees shocking declines
Disney (DIS) published its latest earnings report, delivering a strong first quarter for fiscal 2025 in nearly all aspects of its business. However, its streaming sector is starting to face a few bumps in the road, as it has lost Disney+ subscribers for the first time after multiple years of growth.
Disney+ reported a 1% decline in subscribers compared to the previous quarter, with a 1% increase in domestic subscriptions and a 2% decrease internationally.
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As shocking as this may sound to some, Disney had already predicted this slowdown last quarter, warning investors about an upcoming slight decline in streaming subscribers. During this current quarter, the company provided yet another warning about more upcoming declines for the second quarter.
Disney increases subscription prices to pay for streaming investments
Disney+’s high demand and multiple investments to meet consumers’ needs and make the streaming service more desirable amid growing competition led to a spike in subscription costs.
Although this is a way for Disney to pay off its huge streaming investments, the price hikes also put the company at risk of losing subscribers who can no longer afford them.
In October of last year, Disney+ raised prices for its ad-supported and ad-free tiers by $2 per month. It also increased its Disney Duo Basic (Disney+ and Hulu with ads) subscription by $1 monthly, and both its Disney Bundle Trio Basic (Disney+, ad-supported Hulu, and ESPN+) and Premium (Disney+, ad-free Hulu, and ESPN+) went up $2 per month.
Hulu subscribers also suffered from the price hikes, as Disney increased the monthly prices for Hulu’s ad-supported tier by $2 and its ad-free tier by $1 and raised the monthly prices for the Hulu and Live TV bundle ad-supported and ad-free tiers by $6.
Most recently, Disney has heavily invested in sports, closing deals with the most prominent sports leagues. Because of the massive costs associated with these investments, the company raised its monthly ESPN+ subscription prices by $1.
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To return Disney+ to subscriber growth, the company said it will invest in technology to deliver high-quality products and provide consumers with a more convenient one-app experience to increase engagement.
“In terms of subscribers, we believe that in order for us to grow subscribers, it’s really a combination of things. We have to continue to make great product, films, and television series, said Disney CEO Robert A. Iger. “We clearly have demonstrated over the last couple of years the ability to do that, and we are confident that we will deliver on a consistent basis, high-quality films and television over the long run,” he added.
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