Disney Aims for Streaming Growth Amidst Netflix's Dominance

Disney remains optimistic about regaining growth in its streaming business in 2023, despite the continued dominance of Netflix (NFLX).

"Our strategy focuses on subscriber growth and margin improvement, and we're making progress," said Disney CFO Hugh Johnston.

Despite reaching 125 million subscribers in the latest quarter, Disney+ missed analyst expectations of 148.7 million. This contrasts with Netflix's impressive gain of 19 million subscribers, driven by live sports events.

Johnston predicts increased content and paid sharing options will boost Disney+ performance later this year. However, analysts remain cautious, noting Disney's need to balance growth with investment in international programming and technology, where Netflix holds a significant advantage.

Earnings Highlights

Disney's recent earnings surpassed expectations:

* Net Sales: $24.7 billion, up 5% year-over-year
* Adjusted EPS: $1.76, up 44% year-over-year
* Direct-to-Consumer Revenue: $5.78 billion, up 15% year-over-year

Margin Improvements

Cost-cutting measures under CEO Bob Iger have led to improved profitability:

* Direct-to-Consumer Operating Profits: $298 million, up from a loss of $138 million last year
* Entertainment Segment Operating Profit: 95% increase, driven by box office success and cost controls

Outlook

Disney expects high-single-digit percentage EPS growth for fiscal year 2025, supported by ongoing margin improvements. However, challenges in the linear TV business and Disney+'s slow growth may weigh on investor sentiment.