The Disney+ streaming service has been slowing down for years and still isn’t making money, despite what CEO Bob Iger wants shareholders to think.
While Disney+ might be one of the biggest dogs in the global streaming wars, that doesn’t mean that it’s successful from a financial standpoint. In fact, one could say that it has been a huge catastrophe for Disney’s accountants, losing money in virtually every earnings report since the platform was launched in 2019.
Bob Iger, who was briefly replaced by former CEO Bob Chapek as company head, has been remarkably candid in what a debacle Disney+ has been, telling CNBC’s Squawk on the Street, “I came back, and the losses were around $4 billion a year. It was clear that that was not sustainable and not acceptable, and the goal was first, let’s reduce those losses.”
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At the time, Bob Iger also claimed that a big part of the problem was that Disney+ was trying to compete head-on with Netflix in terms of subscriber numbers. He said, “We ended up losing a lot of money on that, more so than we expected initially. Part of that was because we were chasing sub[scriber] growth and not as focused as we needed to be on the bottom line.”
Well, a new report from EMARKETER might be distressing for Disney shareholders. It turns out that subscriber growth and accompanying revenue have stagnant for the streaming service and peaked in Q4 of 2023.
According to EMARKETER, revenue growth for Disney+ hit its height in the last quarter of 2023 with a 15% increase. In contrast, Q2 of this year has shown a noticeably lower 5.1% increase, which is very bad, not good for the Mouse’s attempts to make it seem as though streaming is going to work out someday.
Recently, Disney tried to claim that “overall” streaming had finally turned a profit for shareholders, ahead of projections. A close reading of their financials showed that Disney+ and Hulu are still losing money by the bucketful and that the report was structured to include earnings from ESPN+ to make a net profit.
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And that’s not the only problem that Disney is having with streaming services. The Mouse House has been attempting to launch a massive new joint venture with its nominal rivals, Warner Bros. Discovery and Fox, to take control of the streaming sports market, dubbed Venu Sports.
However, the planned launch was shut down when U.S. District Judge Margaret Garnett granted FuboTV, another sports streaming TV service, a preliminary injunction against it, saying Venu could be a “multi-year monopolistic runway they have created for themselves [to] provide powerful incentives to thwart competition and hike prices on both consumers and other distributors.”
At the same time, Disney is having a huge issue with non-streaming content. The company is locked in a standoff with DirecTV over channel packages and rates that have caused some 11 million subscribers to lose access to ESPN, the Disney Channel, FX, and more. Technically, there are workarounds for a lot of those customers, but very little of it will help Disney’s bottom line.
Will Disney+ ever make money?