- Disney just made money in streaming for the first time.
- When Disney started streaming in 2019, Wall Street didn't care about profits — it wanted streamers to grow.
- Now investors care about the bottom line, too. So Disney has been steadily raising prices. Looks like it's working.
Streaming used to be a money pit for Disney. Not anymore.
The media giant says it made money selling services like Hulu and Disney Plus for the first time last quarter. It's a small profit — $47 million on revenue of $6.5 billion — but it's still notable. That's because Disney has been burning billions on digital for years, in an attempt to compete with Netflix.
When Disney first made plans for its own streaming business back in 2017, burning billions wasn't considered a problem — it was the playbook. Netflix was losing money building up its own business, and Wall Street was consistently rewarding it for that. So would-be Netflixes like Disney figured they would do the same thing.
But in 2022, as interest rates started climbing and Netflix announced it had suddenly lost a million subscribers, Wall Street made new demands: Growth alone wouldn't cut it — streamers now needed to show they could turn a profit, too.
Now Disney says it has turned the corner and that it will make more money from streaming next quarter, too.
Asked on its earnings call about the reason for streaming's improvement, CEO Bob Iger waxed on about all the great content his company produces and puts on its streamers. But that's only a partial answer — it's not like Disney was in the business of making bad TV shows and movies a few years ago and decided to start making good stuff instead.
Another very obvious reason Disney's business has improved is that it is charging a lot more for its subscriptions, via a series of price hikes. It's a lot easier to make money when people pay you more for the same stuff.
And that's going to keep happening. On Tuesday, the company announced a new set of increases that will bring the price of its basic Disney Plus service to $15.99 a month — more than double the $6.99 price it launched with in 2019.