Disney shrinks its streaming losses in Q2, and park performance remains strong

The House of Mouse has unveiled plans to narrow its streaming-first pipeline and bring Hulu content onto Disney+ to provide a "one-app experience" in the US.
May 11, 2023

In the midst of multiple rounds of planned layoffs and cost-cutting measures, Disney’s Q2 shows some mixed results. But its execs remain bullish on savings and streaming profitability.

The media giant has posted total revenue of US$21.8 billion for the quarter, up from US$19.2 billion in the same period last year. And despite an overall decline in subscribers, DTC revenues increased by 12% to US$5.5 billion.

“The cost-cutting initiatives I announced last quarter are well underway, and we are on track to meet or exceed our [savings] target of US$5.5 billion,” said Bob Iger in his second earnings call since being reinstated as CEO last November. Ongoing layoffs are intended to cut 7,000 jobs overall across multiple divisions at Disney, with kids/animation execs among the latest to be affected. 

On the DTC front, Disney+ dipped to 157.8 million global subscriptions in Q2, down four million from the previous quarter. This drop was primarily attributed to Hotstar (India’s Disney+ platform) losing its streaming rights to Indian Premier Cricket League matches.

In the US and Canada, subscriptions are only down by 300,000 compared to Q1. And Iger is optimistic about the DTC segment’s long-term success, highlighting a reduction in streaming operating losses in Q2. 

Moving forward, Iger announced that Disney will launch a “one-app experience” in the US towards the end of 2023—bringing Hulu content onto the Disney+ platform. And he added that Disney has been in conversation with Comcast about acquiring its one-third stake in Hulu.

CFO Christine McCarthy noted that the company will be removing some content from its streaming platforms, as part of a cost-saving strategy that also includes a reduction in originals. 

“We realized that we made a lot of content that is not necessarily driving [subscriber] growth, and we’re getting much more surgical about what we make,” Iger explained during the Q&A at the end of the earnings call.

While quarterly linear broadcasting revenue has fallen by 7% since the same period last year to US$6.6 billion, the theme park business has remained strong. Showing solid signs of post-pandemic recovery, revenue generated by the Disney Parks, Experiences and Products division increased by 17% to US$7.8 billion this quarter.

In the six months since his return, Iger notes that Disney has been working to create “a more efficient, coordinated and streamlined approach to [its] operations,” emphasizing returning authority to creatives as a goal.

Disney has a big summer ahead, with planned theatrical releases for its live-action reboot of The Little Mermaid (pictured) and Pixar’s Elemental CG-animated film. The company also recently announced three new Star Wars movies from Lucasfilm and a live-action adaptation of Moana, as well as unveiling plans to produce a Freaky Friday sequel (as first reported by The New York Times).

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