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Disney loses Disney+ subscribers again, Wall Street disappointed

Disney posted better-than-expected first-quarter revenue but suffered from an unexpected drop in the number of subscribers to its Disney+ streaming service, prompting a negative reaction from Wall Street.

The Burbank (California) group generated $21.8 billion in revenue in what is the second quarter of its staggered fiscal year (October to September), up 13% year-on-year, according to a statement released. Wednesday.

In the first three months of the year, Disney lost four million Disney+ subscribers net, down to 157.8 million at the end of the period, while analysts saw this indicator progress, beyond 163 million. . This is the second quarter of decline for subscribers to Disney +.

The trajectory contrasts with that of its big rival in online video, Netflix, which remains on three quarters of growth in a row.

In electronic trading after the close of Wall Street, the group’s share lost more than 4%.

The contraction of the Disney + subscriber portfolio is mainly due to an 8% drop in India, where the version of the service, called Hotstar, weighs almost a third of the world total. But the entertainment giant also saw a slight decline (-1%) in North America.

At the same time, Disney nevertheless saw the average revenue per subscription increase by 13%, mainly due to price increases.

The streaming activity remains loss-making, but continued to reduce its losses over the quarter.

– Reduce production –

During the earnings conference call, CEO Bob Iger said he was “incredibly optimistic” about streaming’s potential for ad revenue.

Disney launched in the United States, in December, an offer including advertising messages, at a price lower than its base price. It plans to offer this formula in Europe by the end of the year.

Bob Iger also pleaded for more financial orthodoxy in the group’s audiovisual production for platforms. “It’s crucial that we rationalize the volumes of content we create, and what we spend to produce it,” he urged.

When Disney+ launched in November 2019, “we wanted to overwhelm this space with as much content as possible to gain as many subscribers as possible,” explained the general manager. But “we realized we were producing a lot of content that wasn’t necessarily fueling growth.”

“We want to reduce our production without having an impact on subscriptions,” said Bob Iger.

– Abolition of positions –

As in the previous quarter, the group’s results were driven by theme parks, whose turnover jumped 17% over one year, thanks to better attendance but also to price increases.

The increase on parks alone even reached 23%, but the branch’s revenues were affected by the poor performance of sales of derivative products, whose turnover fell by 23%.

Overall, Disney managed to contain the increase in costs (+10.7%) at a slower pace than its revenues (+13%).

This favorable difference is explained in particular by the cost-saving measures decided by Bob Iger, emblematic boss of the firm who returned to control last November. The company has notably decided to cut 7,000 jobs.

Net profit was nearly tripled to $1.488 billion. Brought back by share and excluding exceptional items, data closely followed by the markets, the profit reached 93 cents, in line with analysts’ expectations.

“The strategy we presented last quarter (early February) is working,” commented Bob Iger.

The company “is on track to meet or exceed our goal of $5.5 billion” in full-year savings, the executive said.

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