Disney's Streaming Ambitions Amidst Netflix Dominance
Key Highlights:
* Disney anticipates streaming growth in 2023, despite Netflix's continued dominance.
* Disney+ gained 125 million subscribers, but fell short of estimates.
* Netflix added 19 million subscribers, showcasing the strength of live sports offerings.
* Disney CFO emphasizes subscriber growth and margin improvement as key priorities.
* International expansion remains a focus for Disney+, with paid sharing also expected to drive growth.
* Analysts note the challenge of balancing profit growth with investments in local programming and technology.
Earnings Report Overview:
Disney's earnings surpassed expectations, with strong growth in entertainment revenue and cost reductions.
Financial Performance:
* Net sales: $24.7 billion (+5% YoY)
* Direct-to-consumer revenue: $5.78 billion (+15% YoY)
* Adjusted EPS: $1.76 (+44% YoY)
Industry Analysis:
While Netflix's subscriber growth is impressive, Disney's ongoing cost optimization and focus on margin improvement position it well for future success. However, the decline in linear TV and modest growth in Disney+ may raise investor concerns in the short term.
Executive Perspective:
"We're managing the business in a way where we're trying to grow subs and we're trying to improve margins at the same time, and we're very much on track," said Disney CFO Hugh Johnston.
Analysts' Outlook:
Analysts question the sustainability of Disney's earnings growth given the ongoing challenges in the experiences division and the sluggishness of Disney+. They emphasize the need to strike a balance between profitability and investment in local programming and technology to remain competitive.