Walt Disney’s turnaround strategy for streaming business

Bob Iger’s return as CEO of Walt Disney in 2022 came with a bold commitment to making the company’s streaming division profitable. Recent quarterly results suggest the media giant is on track, reflecting the effectiveness of Bob Iger’s strategy.

Walt Disney streaming service
Walt Disney streaming service

Walt Disney has reported a second consecutive quarterly profit for its streaming segment, which earned $253 million in the fourth quarter of 2024. This was bolstered by cost-cutting initiatives and a 4.4 million subscriber increase, partly driven by a crackdown on password-sharing. The streaming profits nearly offset a $307 million decline in operating income from Disney’s traditional television business, Reuters news report said.

Walt Disney’s revenues rose 6 percent for Q4 to $22.6 billion from $21.2 billion in the prior-year quarter. The growth in Walt Disney’s revenues was 3 percent for the year to $91.4 billion from $88.9 billion in the prior year. Walt Disney’s streaming revenue rose 14 percent to $24.93 billion.

Walt Disney’s income fell 6 percent to $0.9 billion in Q4 from $1.0 billion in the prior-year quarter. Walt Disney’s income increased 59 percent for the year to $7.6 billion from $4.8 billion in the prior year.

Disney’s password-sharing crackdown, implemented in June, followed a similar move by Netflix and has helped boost both subscriber numbers and revenue.

Since his return, Bob Iger has scaled back on high-cost original content, which had previously led to a $1.5 billion streaming loss in late 2022. The company has raised Disney+ subscription prices multiple times, most recently in October, to enhance margins.

Disney continues to balance its original streaming offerings — such as Only Murders in the Building on Hulu and Agatha All Along on Disney+ — with theatrical releases. Films like Deadpool & Wolverine and Pixar’s Inside Out 2 have driven increased viewership of related franchise content on Disney+.

Walt Disney’s streaming focus is centered around expanding its offerings and increasing its profitability through strategic investments, audience segmentation, and technological improvements. Here are the key points:

Disney+ has become a key player in the streaming industry with over 120 million core subscribers.

The integration of Hulu into Disney+ has created a comprehensive platform offering a mix of branded content, general entertainment, news, and live events.

Disney is leveraging its ownership of ESPN to add value to its streaming services.

An ESPN tile will be introduced on Disney+ (December 4, 2024), marking the beginning of a more integrated sports streaming experience.

The launch of ESPN’s flagship direct-to-consumer (DTC) offering is planned for early fall 2025, aiming to bring a full sports offering to Disney+ in the U.S.

Around 37 percent of U.S. subscribers and 30 percent of global subscribers use Disney’s Advertiser-Supported Streaming (AVOD) model.

Recent pricing strategies encourage migration to AVOD, as it has higher Average Revenue Per User (ARPU) and growing advertiser interest.

While focusing on the U.S. market, Disney is cautiously investing in EMEA and APAC regions.

Investments in these regions are tied to improving technology to reduce churn and maximize content ROI.

Disney emphasizes the role of technology in reducing churn and increasing the efficiency of content investments. Enhancing technology will enable better user experiences and improve long-term profitability.

With strategic adjustments and a focus on profitability, Disney is positioning itself to challenge industry leaders in the streaming landscape while adapting to shifting consumer habits.

Latest

More like this
Related

Why Prime Video is behind Netflix in Latin America

Prime Video is a strong contender in the Latin...

Strategies of Disney+ to strengthen streaming market position

Disney+ is taking bold steps to stay ahead in...

Strategies for Prime Video to handle retention challenges

Streaming services like Prime Video are grappling with high...

Netflix ad-supported tier reaches 70 mn users

Netflix has revealed that its ad-supported plan now has...