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In a landmark quarter for The Walt Disney Company, its streaming platforms Disney+, Hulu and ESPN+ have turned profitable for the first time, marking a significant milestone in the company's digital strategy. This achievement comes a quarter earlier than anticipated, driven by the blockbuster success of Pixar's "Inside Out 2" and overall strong performance across Disney's entertainment segment.
The animated sequel "Inside Out 2" has shattered records, becoming the highest-grossing animated film of all time with a global box office haul of $1.56 billion. Its popularity sparked a surge in Disney+ subscriptions, with over 1 million new subscribers signing up to watch the original "Inside Out." The 2015 film garnered more than 100 million views on the streaming platform following the sequel's release.
Disney CEO Bob Iger highlighted the quarter's success, stating, "This was a strong quarter for Disney, driven by excellent results in our Entertainment segment both at the box office and in DTC [direct-to-consumer], as we achieved profitability across our combined streaming businesses for the first time and a quarter ahead of our previous guidance."
The company reported a 15% increase in revenue from its streaming services, with the consolidated direct-to-consumer business swinging to an operating income of $47 million, compared to a $512 million loss in the same quarter last year. Total revenue for the quarter rose 4% to $23.16 billion, while operating income jumped 19% to $4.23 billion.
However, the results were not uniformly positive across all segments. Disney's domestic theme parks saw a 6% decline in operating profit, with the company warning of potential continued weakness in this area for the next few quarters. The TV business, excluding ESPN, also continued to face challenges with declining ad sales.
Looking ahead, Disney plans to capitalize further on its streaming success by raising subscription prices across all platforms this fall. Most plans are set to increase by $1 to $2 per month, continuing a trend that has seen the price of Disney+ double since its 2019 launch.
The company projects continued improvement in streaming results for the fiscal fourth quarter, with both Entertainment DTC and ESPN+ forecast to be profitable. Disney+ Core subscribers are expected to grow modestly in the current quarter, ahead of the planned October price hike.
As Disney navigates the evolving media landscape, its recent success in streaming profitability marks a significant step forward in its digital transformation. However, challenges remain in traditional segments, highlighting the need for continued adaptation and innovation across the company's diverse portfolio of businesses.