Walt Disney Company faces problems with Disney+. The entertainment giant announced that what is one of its big bets and its main streaming platform had lost, between January and March 2023, four million users. This is the second consecutive quarter in which Disney+ posted losses, as between October and December 2022 the streaming network lost a total of 2.4 million customers.
The consequences of this information did not take long to arrive and Wall Street was the first to notice them. After opening the session last Thursday, the Walt Disney Company's stock price fell by 8.70%. A decline that made it, by far, the company with the greatest losses among the thirty stocks analyzed by the Dow Jones, the main index of the New York Stock Exchange.
Disney+ loses subscribers, but increases revenues
The drop in subscribers, interestingly, did not affect the Walt Disney Company's streaming division's profits. Bob Iger, CEO of the company, informed advertisers that its revenues increased by 13.3% compared to the same period last year. In this way, the entertainment giant had increased its revenues to 5,514 million dollars during this fiscal year. Losses also declined and operating income was US$659 million, 26% lower than the same period last year.
And the news got better and better as Iger spoke. The Walt Disney Company reported that it had almost tripled its profits by earning a total of 1,271 million dollars compared to the 470 million dollars it pocketed in the same period of the previous fiscal year. A result that, according to Disney's CEO, was obtained in part thanks to the results achieved by its streaming services:
We are pleased with our achievements this quarter, including the improved financial performance of our streaming business, which reflects the strategic changes we have been making across the company to realign Disney for sustained growth and success.
Iger launches measures to alleviate Disney's financial crisis
But the loss of customers worries The Walt Disney Company. Bob Iger presented several measures with which they will try to solve the financial crisis that the company is also experiencing. According to what he said during the call, Disney+ will integrate Hulu content into the platform's U.S. app and will also remove content from the network. Christine McCarthy, CFO of the company, was in charge of announcing this decision:
We are reviewing the content of our direct-to-consumer services to align them with strategic changes in our approach to content selection. As a result, we will remove certain content from our streaming platforms, and currently expect to realize an impairment charge of approximately US$1.5 billion to US$1.8 billion. The charge, which will not be recorded in our segment results, will be recognized primarily in the third quarter as we complete our review and remove the contents.
This will not be the only measure taken by the company. Iger also informed that the streaming platform will raise its rates again. It currently has two plans, one for $7.99 per month that includes ads and another for $10.99 per month. Both will raise their rates, although the Walt Disney Company did not specify how much the increase will be or when it will take place.
