Disney Strives for Streaming Growth Amidst Netflix's Dominance
Key Takeaways:
* Disney expects streaming business growth despite challenges.
* Disney+ subscriber count falls short of estimates.
* Disney CFO Johnston highlights sub growth and margin improvement goals.
* Investors react cautiously to streaming slowdown despite strong earnings.
Streaming Battle Heats Up
Disney's streaming service, Disney+, saw a decline in subscribers in the latest quarter. This lags behind Netflix's impressive subscriber growth, which has solidified its dominance in the industry.
Disney's Strategy
CFO Hugh Johnston emphasizes Disney's strategy of balancing subscriber growth with margin improvement. He anticipates a surge in Disney+ content and the launch of ESPN+ as key growth drivers.
Earnings Analysis
Disney's quarterly earnings surpassed expectations, led by strong entertainment and direct-to-consumer revenue. Aggressive cost-cutting measures under CEO Bob Iger have significantly improved profitability.
Outlook and Investor Sentiment
Disney maintains its high-single-digit EPS growth target for fiscal year 2025. However, the ongoing decline in linear TV revenue and slower Disney+ growth raise concerns among investors.
Analyst Perspective
MoffettNathanson analysts question the sustainability of Disney's recent growth, given the declining contribution from the experiences division.
Executive Summary
Disney faces a challenging streaming landscape, with Netflix continuing to dominate. However, the company remains optimistic about its growth prospects, citing improved profitability and a robust content pipeline. Investor sentiment remains cautious as they weigh the streaming slowdown against strong earnings.