Disney streaming business turns profit for first time with 109% year-on-year increase

Disney’s entire direct-to-consumer business turned a profit for the first time, earning the studio $47m (£36.9m) in Q3, according to its latest financial results.

This represented a 109% increase in profit from the $512m (£402.4m) loss it made at the equivalent time last year. Overall, Disney cut its direct-to-consumer operating income loss by 92% year-on-year from $2.2bn to $187m (£1.7bn to £147m).

The direct-to-consumer business spans flagship streamer Disney+, US streamer Hulu and sports platform ESPN+. The combined revenues for these divisions represented over $10bn (£7.9bn). Direct-to-consumer excluding ESPN+ grew revenues 15% year-on-year, from $5.05bn (£3.96bn) to $5.8bn (£4.bn); while ESPN revenues grew 5% to reach $4.3bn (£3.4bn) in Q3.

Disney+ added 800,000 net subscribers in the US and Canada to reach 54.8m, while international excluding Disney+ Hotstar saw a 100,000 membership drop resulting in 63.5m. Overall, global Disney+ core subscribers excluding Disney+ Hotstar saw a 700,000 net gain to reach 118.3m.

Disney’s “better-than-expected” Q3 result confirms previous analysis which suggested the company would be the first of the US studio majors to reach streamer profitability, slightly behind the Q1 prediction, but ahead of its own forecast to reach this point in Q4.

Overall, Disney’s entertainment division – which encapsulates its D2C business excluding ESPN+ - contributed $10.6bn (£8.3bn) of Disney’s total $23.2bn (£18.2bn) revenues in the quarter.

The company will also have benefitted from the theatrical performance of Inside Out 2, which opened on June 14 and is currently the highest-grossing release of 2024 with $1.6bn (£1.3bn) global box office takings. Deadpool & Wolverine will pass the $1bn mark in the next few days, continuing a decent period for the company.

Disney forecast it would grow its Disney+ core subscribers modestly in Q4 and maintain and improve streamer profitability, with both entertainment D2C and ESPN+ expected to be profitable in the quarter.

“Our performance in Q3 demonstrates the progress we’ve made against our four strategic priorities across our creative studios, streaming, sports, and experiences businesses,” said Disney chief exec Bob Iger. “This was a strong quarter for Disney, driven by excellent results in our entertainment segment both at the box office and in direct-to-consumer, as we achieved profitability across our combined streaming businesses for the first time and a quarter ahead of our previous guidance.

“Adjusted earnings per share for the company was up 35%, and with our complementary and balanced portfolio of businesses, we are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets.”

• UK creative organisations demand “transparency” around AI in letter to major tech firms