In the last three months of 2022, approximately 2.4 million subscribers chose not to renew their subscription with Disney+, reaching 161.8 million.
This was revealed by CEO Bob Iger at a meeting held Wednesday evening (Italian time) for first quarter earnings.
For the first time in nearly three years, the platform saw a decline.
Iger attributed the decline in subscriptions to a decrease in interest abroad, particularly in India (in part due to the loss of cricket, a mainstay of Disney+Hotstar’s offering) and parts of Southeast Asia.
Not counting Hotstar package customers , core Disney+ gained 1% sequentially to 104.3 million.
Surprisingly, there has been an increase in subscriptions to Disney+, Hulu and ESPN+ in the United States and Canada . Disney got 200,000 new subscriptions (46.6 million total), Hulu got 800,000 (48 million total), and ESPN 600,000 (24.9 total).
“We will focus even more on our core brands and our franchises, which have always delivered higher returns.”
Other priorities will be pricing, local content, and promotions.
The company, he said, has been “probably too aggressive” in marketing its streaming services, although acquiring subscribers will remain a priority in the future, as long as they are “quality subscriptions”, i.e. more subscribers. faithful who may be more inclined to price increases.
However, this didn’t impact the company’s overall earnings, as increased revenue at Disney theme parks helped balance out the bottom line.
Iger assured investors that there are plans to get back on track:
“After a solid first quarter, we are embarking on a significant transformation that will maximize the potential of our world-class creative teams and our unrivaled brands and franchises.
We believe the work we are doing to reshape our company around creativity
while reducing expenses will lead to sustained growth and profitability of our streaming business, better position us to face future crises and global economic challenges, and create value for our shareholders”.
Disney showed improvement in a number of financial categories in the quarter ended Dec. 31, compared to last November’s negative result, just prior to the ousting of Chief Executive Officer Bob Chapek .
Revenue climbed 8% to $23.5 billion over the prior period and earnings per share reached 99 cents.
Both revenue and earnings beat Wall Street analysts’ expectations.
Operating losses in direct-to-consumer streaming narrowed to $1.1 billion from $1.5 billion, beating the company’s forecast of a reduction of $200 million.
After former CEO Bob Chapek dismantled Disney Media & Entertainment Distribution ( DMED ) , which wrested control over content decisions from the company’s creative executives, Iger began the company’s reorganization.
There are three main segments: Disney Entertainment , led by Dana Walden and Alan Bergman ; ESPN which also includes ESPN+ , led by Jimmy Pitaro ; Parks, Experiences & Products which will continue to be led by Josh D’Amaro .
The DTC businesses , with the exception of ESPN+ , will be owned by Entertainment .
In revealing the new plan, Iger said the goal is to
“Bringing creativity back to the heart of the company”.
The reorganization will also help streamline the streaming business to achieve sustained growth and profitability and reduce expenses in a world of increased competition and global economic challenges.
layoffs and savings
Disney will reduce its workforce by 7,000 to try to cut costs. The figure represents 3.2 percent of the company’s total workforce, which totals approximately 220,000 people worldwide as of October 1, 2022.
“I have enormous respect and appreciation for the dedication of our employees around the world. While this is necessary to address the challenges we face today, I do not take this decision lightly.”
The layoffs are part of Disney ‘s efforts to drive about $5.5 billion in cost savings, including $3 billion in non-sports content. Of that, $2.5 billion represents “non-content costs” (including labor costs), and $1 billion of these targeted cost reductions are already underway, Iger said .
Disney is targeting a $3 billion annual reduction in non-sports content costs, which is expected to be realized over the next few years, Christine McCarthy , Disney ‘s chief financial officer, told analysts .
Disney aims to reduce non – sports content costs by $3 billion annually,
Iger said the company has asked the board of directors to reinstate the dividend by the end of the calendar year. Payments had been abruptly halted during the Covid pandemic, to save cash.
“When it comes to investing in growth and returning capital to shareholders, we will take a balanced and disciplined approach, as we did during my previous tenure as CEO, when we invested in our core businesses and acquired new ones, bought back shares and paid a dividend to our shareholders. Following the impact of the Covid pandemic, we have decided to suspend the dividend in spring 2020. Now that the impact of the pandemic on our business has largely passed. We intend to ask the Board of Directors to approve the restoration of the dividend by the end of the calendar year.
Our cost-cutting initiatives will make that possible, and even if it’s a modest dividend initially. We hope to be able to increase it over time”