Disney Posts First-Ever Streaming Profit

Disney’s streaming and movie businesses shifted into high gear last quarter, picking up the slack from the theme-parks unit, which has begun to show signs of strain.

The Wall Street Journal reports the entertainment giant’s streaming unit, which includes flagship platform Disney+, general entertainment service Hulu and the sports-focused ESPN+, became profitable one quarter ahead of schedule, producing operating income of $47 million on $6.38 billion in revenue, Disney said Wednesday.

Overall, Disney swung to a profit of $2.62 billion for the quarter from a loss of $460 million a year earlier, when the company took substantial restructuring and impairment charges. Revenue rose 3.7% to $23.16 billion. Both results exceeded Wall Street expectations: Analysts polled by FactSet had anticipated net income of $1.94 billion and revenue of $23.08 billion.

Disney raised its forecast for full-year growth in adjusted earnings per share to 30% from 25% and said it expects both streaming profitability and the company’s number of core Disney+ subscribers to grow in the fourth quarter.

While Disney’s quarterly streaming profit was small, the shift in that unit’s fortunes is symbolically important. Since the launch of Disney+ in November 2019, Disney has lost more than $11 billion to the streaming wars, as competition from rivals and rising content costs forced the company to spend more to produce and license TV shows, sporting events and movies than it was generating in subscription fees, quarter after quarter. 

Disney said the result was driven in large part by the strong box office performance of “Inside Out 2,” the coming-of-age animated feature produced by Disney-owned Pixar. The film opened in early June, just weeks before the fiscal quarter ended, and has since sold nearly $1.6 billion in tickets at the global box office, becoming the highest-grossing animated film of all time. The runner-up is another Disney title, 2019’s “Frozen II.”

The Experiences unit, which includes Disney’s six global theme-park resorts, a cruise line, consumer products sales, videogame licensing, and other businesses, saw revenue increase slightly to $8.39 billion. But operating income fell 3.3% to $2.22 billion despite steady park attendance numbers and per-visitor spending, largely because of increased costs and soft consumer demand toward the end of the quarter, the company said. Analysts polled by FactSet had expected the division to produce $2.3 billion in operating income.