On August 7th local time, The Walt Disney Company announced its financial report for the third quarter of fiscal year 2024, ending on June 29th, 2024. The company's quarterly revenue increased from $22.3 billion in the same period last year to $23.2 billion. In the third fiscal quarter, it turned losses into profits, from a loss of $460 million in the same period last year to a profit of $2.62 billion, far exceeding market expectations. Adjusted earnings per share increased from $1.03 in the same period last year to $1.39.
Disney CEO Robert Iger said, "The performance in the third quarter demonstrates the progress we have made in our four strategic priorities of film and television content creativity, streaming, sports, and experiences. Disney's strong performance this quarter is attributed to Disney Entertainment's outstanding performance in movie theaters and direct to consumer business. Our streaming business has achieved overall profitability for the first time and is one quarter ahead of our previous guidance target. Although Disney Experience performed steadily in the third quarter, the company's adjusted earnings per share increased by 35%. With a complementary and balanced business portfolio, we are confident in continuing to drive profit growth through unique and strong assets
The Disney streaming business, which is most concerned by the market, has achieved overall profitability. This business segment includes Disney+, Hulu, and ESPN+, which were merged into the "DTC streaming business" in the financial report. During the quarter, it achieved a total revenue of 6.38 billion US dollars, a year-on-year increase of 15%, and an operating profit of 47 million US dollars, a significant improvement compared to the loss of 512 million US dollars in the same period last year. It is worth noting that after excluding sports platform ESPN+, Disney's streaming business still incurred a loss of $19 million.
In terms of subscription size, Disney+and Hulu still have relatively weak growth. According to the financial report, the core subscription users of Disney+in the third quarter were 118.3 million, a slight increase of 1% compared to the previous quarter. Hulu has a total of 51.1 million subscribers, compared to 50.2 million in the previous quarter. As a comparison, Netflix's global number of paying users increased significantly by 16.5% year-on-year to 278 million in the current quarter, with a month on month increase of 8.05 million people, firmly holding the position of the world's largest streaming platform.
In June of this year, Disney piloted cracking down on account sharing in some countries and regions. On August 7th, Iger once again stated that Disney+will begin cracking down on password sharing in September. When someone is found using a non personal account, Disney+will prompt the user to register their own account. In addition, Disney will also launch additional paid sharing features, but there are currently no specific details about this service. Iger emphasized during the earnings conference call that the crackdown on account sharing will be 'in earnest'.
At the same time as cracking down on account sharing, Disney also announced a new round of subscription fee increase plans. On August 6th, Disney announced an increase in subscription prices for Disney+, Hulu, and ESPN+. The lowest priced version of Disney+with ads will increase its price by 25% to $9.99 per month, while the ad free version will increase its price by 14% to $15.99. The price of the advertising package bundled with Disney+and Hulu has increased by 10% to $10.99 per month, while the price of the ad free package remains at $19.99 per month. Hulu with ads costs $9.99 per month, while Hulu without ads charges $18.99 per month. In addition, ESPN+with advertisements charges 11.99 yuan per month. The price increase will take effect on October 17th.
Egger said, 'The growth in user consumption and the popularity of our content have given us confidence to raise prices.'. He expects that the price increase will only bring a small amount of user loss, and the revenue of streaming media business will continue to grow.
In terms of film distribution, Disney did not release any new films in the second fiscal quarter. However, this fiscal quarter saw the release of two major IP sequels, "Inside Out 2" and "Deadpool and Wolverine". Among them, "Inside Out 2" has grossed over $1.5 billion worldwide, becoming the highest grossing animated film in history and ranking among the top ten highest grossing movies in history. As of the time of writing, the global box office of the R-rated movie "Deadpool and Wolverine" has also approached $1 billion.
Brain Agents 2
The financial report also mentioned that during the release of "Mind Corps 2", the IP series predecessor "Mind Corps" on Disney+attracted over 1.3 million users to the platform. These two films successfully helped Disney's content distribution and licensing business turn losses, from a net loss of 112 million in the same period last year to a profit of 254 million.
Disney's upcoming new releases include "Ocean of Legends 2," "Moana 2," "Mufasa: The Lion King," "Captain America: Brave New World," "Snow White," and more. Previously, Iger stated that Disney's film distribution will focus on quality rather than quantity, which is particularly evident in Marvel movies.
Disney's problem lies in its theme park business. In the third fiscal quarter, Disney theme park revenue increased by 2% year-on-year to $8.383 billion, while operating profit decreased by 3% year-on-year to $2.2 billion. Disney's domestic (US and Canada) revenue decreased by 6% year-on-year to 1.35 billion US dollars, while its overseas park business revenue increased slightly by 2% year-on-year to 440 million US dollars. Disney stated that the depreciation of the US dollar and inflation have led to a decline in revenue for domestic theme parks, and the investment in new technologies and facilities has also compressed its profit margins.
Meanwhile, Disney stated in its financial report that due to the cyclical weak consumption in China and the impact of the Paris Olympics on the decrease in the number of visitors to local parks, it is expected that the theme park business revenue will continue to fluctuate in the next fiscal quarter.