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The Walt Disney Company announced on its August 7 investor call that its direct-to-consumer business, including Disney+ and Hulu, reported a quarterly operating loss of $19 million. That is an exponentially lower sum than the $505 million loss the previous year. In the third quarter earnings released, Disney’s streaming business turned profitable for the first time, generating $47 million across Disney+, Hulu, and ESPN Plus.
Disney CEO Bob Iger highlighted the company’s strong quarter, achieving profitability in the streaming business. The success was attributed to the 2015 Pixar film Inside Out, which drove 1.3 million Disney+ sign-ups, with the sequel becoming the top-grossing animated film globally.
“This was a strong quarter for Disney, driven by excellent results in our Entertainment segment both at the box office and in DTC, as we achieved profitability across our combined streaming businesses for the first time and a quarter ahead of our previous guidance,” Iger said in a statement.
Disney’s box office hits contributed $1.2 billion to its success in the entertainment department. However, the company announced a price increase coming this fall with the ad-supported Disney+, Hulu, and ESPN+ bumping to $9.99 per month. The ad-free versions will be $15.99 and $18.99 monthly, respectively, with ESPN+ going to $11.99 monthly.
Iger defended the price hike on the call, saying Disney has more pricing leverage–that is, the ability to raise prices–than before because he sees the platform as a good deal.
“Every time we’ve taken a price increase, we’ve had only modest churn from that. Nothing that we would consider significant,” he said. A “churn” rate refers to losses from people leaving a given service.
Disney+ added just under 1 million subscribers in the US and Canada, bringing its total to 54.8 million. Hulu subscribers also grew to 51.1 million, compared to 50.2 million last quarter. Even though its subscriber growth remained somewhat stagnant, Disney is still looking for ways to monetize its existing subscriber base.
