In his first full quarter as Disney CEO, Josh D’Amaro floated the idea of a free ad-supported Disney+ tier as executives and analysts discussed a solid Q3.
D’Amaro, who took over the reins from Bob Iger in March, said the idea was to broaden the company’s reach to price-sensitive customers, increase advertising revenue, and eventually grow subscribers. “Nothing specific to announce today, but definitely something that we’re considering,” the executive said.
Streaming was a key driver for the period ending June 27. Disney+ and Hulu revenues climbed 11% year-on-year to $5.5bn revenue, and profits grew by more than 100% to $712m. Subscription fees increased by 15% to $4.7bn, however Disney no longer updates on subscriber count every quarter.
The experiences division saw a 10% rise to just shy of $10bn for the period ended June 27. D’Amaro is moving the consumer products division from the Experience segment, which houses theme parks and cruise ships, into Entertainment, which houses the studios unit.
The Entertainment segment that houses the studios unit saw revenues climb 6% to $11.3bn in Q3, with June 19 release Toy Story 5 the big hit for the studios division on to earn more than $1bn globally, pushing the franchise past $4bn, with more than two million hours viewed on Disney+.
D’Amaro even congratulated Sony and Marvel for the $1bn-plus global box office success of Spider-Man: Brand New Day, which he said boded well for the upcoming release of Avengers: Doomsday in December.
Executives asserted the value of cycling IP throughout the company, noting that while The Mandalorian And Grogu on $345m worldwide and the live-action Moana on $262m performed below expectations, investing in both core properties brings benefits. The Mandalorian And Grogu drives interest in the Millennium Falcon: Smugglers Run ride at Disney World in Florida, while Moana is expected to be a strong performer on Disney+ given that its 2016 animation forerunner has been one of the platform’s most popular titles.
“The theatrical window is just one data point and the real value of that IP is the cumulative benefit of decades-long storytelling and our ability to take that IP and to play it into the entirety of the Disney flywheel,” said EVP and CFO Hugh Johnson.
Earlier on Wednesday Disney and TikTok announced their deal whereby Disney+ will stream Disney-centric content created by fans on TikTok. The arrangement will debut in the US in the coming months and the plan is to roll it out to select international markets. “That creates a more complete experience on Disney+ and it’s a stickier app,” D’Amaro said.
Overall revenues gained 7% in the three months to reach $25.2bn. Adjusted earnings per share gained 28% to $2.06.
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