“The pricing modifications we’ve already carried out have confirmed profitable,” stated Iger.
Disney+ misplaced 4 million international subscribers through the first three months of 2023—its second consecutive drop—dipping to 157.8 million. The U.S. and Canada misplaced 300,000 subscribers, with the vast majority of churn coming from Disney+ Hotstar.
CFO Christine McCarthy attributed the home drop to “continued impacts” from the prior worth improve.
“We have been pleasantly stunned that the lack of subs resulting from what was a considerable improve in pricing for the non-ad-supported Disney+ product was de minimis,” stated Iger. “That leads us to consider that we in reality have pricing elacsticity.”
Hulu added 200,000 subscribers to succeed in 48.2 million, and ESPN+ gained 400,000 to hit 25.3 million subscribers.
Say goodbye to (some) content material
Disney can also be set to take away “sure content material” from its streaming platforms, in keeping with McCarthy. The corporate is bracing for an incoming impairment cost of $1.5 to $1.8 billion, coming within the third quarter.
“Going ahead, we intend to supply decrease volumes of content material in alignment with this strategic shift,” McCarthy added.
In response to Iger, the corporate realized that a lot of the content material it created has not been driving subscriber progress, and Disney will likely be getting “way more surgical” about what it produces.
“As we glance to scale back content material spend, we’re seeking to cut back it in a means that should have no influence on in any respect on subs,” stated Iger. “We consider that there’s a chance for us to focus extra on actual sub-drivers.”
“If you make loads of content material, every thing must be marketed,” he added. “You’re spending some huge cash advertising issues that aren’t going to have an effect on the underside line, besides negatively, as a result of advertising prices.”
Disney’s DTC division misplaced $659 million within the quarter, an enchancment from the $1.05 billion it misplaced final quarter. And whereas McCarthy anticipates wider losses within the third quarter, the manager reiterated that 2022’s fourth quarter $1.5 billion DTC drop must be peak losses.
