Disney Eyes Streaming Growth Recovery Amid Netflix Dominance
Disney (DIS) anticipates a resurgence in its crucial streaming business in 2023, despite Netflix's (NFLX) unwavering dominance.
Disney's Chief Financial Officer, Hugh Johnston, expressed confidence in the company's strategy of balancing subscriber growth and margin improvement during an interview with Yahoo Finance.
"We're managing the business to grow subs and improve margins, and we're on track," Johnston said.
Recent Performance
Disney+ reported 125 million subscribers in its latest quarter, falling short of analyst estimates of 148.7 million. Comparatively, Netflix stunned investors by adding 19 million subscribers during the same period, fueled by live sports events.
Future Prospects
Disney anticipates a content-driven surge in Disney+ subscribers in the latter half of 2023. The inclusion of ESPN+ and paid sharing initiatives are expected to drive growth.
Analyst Robert Fishman notes the challenges in matching Netflix's international dominance, highlighting the need for Disney+ to balance profit growth with local programming investments and technology costs.
Financial Results
Disney's recent financial performance included:
* Net sales: $24.7 billion (+5% YoY)
* Direct-to-consumer revenue: $5.78 billion (+15% YoY)
* Adjusted EPS: $1.76 (up 44% YoY)
Cost-Cutting and Profitability
Disney's cost-cutting under CEO Bob Iger is yielding significant profitability improvements, evident in the recent quarter's notable operating profit gains in direct-to-consumer and entertainment segments.
Challenges
Despite Disney's financial progress, the ongoing decline in linear TV revenue and sluggish Disney+ growth could pose challenges in the near future.
Investor Outlook
Investors are weighing the potential impact of Disney+'s growth trajectory and the sustainability of the experiences division's contribution to overall earnings.