Disney plans price hikes amidst declining sales and performance concerns.

Disney plans price hikes amidst declining sales and performance concerns.

Disney is grappling with business revitalization as it considers price hikes and increased ads on its streaming service. The entertainment giant plans to raise fees for its ad-free US streaming service in the fall, and in November, it will introduce Disney+ with ads in the UK, Europe, and Canada. The company faces several challenges, including a lacklustre film performance and a significant decline in TV ad sales. Even its theme parks show signs of strain.

Although Disney’s park division experienced a 13% revenue increase, attendance waned at its Florida amusement park for the quarter ending July 1. The company cited clashes with Governor Ron DeSantis and his criticism of Disney’s perceived “woke” stance as factors contributing to the drop.

Despite an overall 4% YoY revenue growth for the quarter ending July 1, Disney posted a loss of $460 million, in contrast to a $1.4 billion profit during the same period last year. Disney CEO Bob Iger acknowledged the need for improvement and expressed confidence in Disney’s long-term trajectory, despite disappointing performances in recent films like the new live-action Little Mermaid and Guardians of the Galaxy Vol. 3.

Executives downplayed the attendance dip in Florida, attributing it to broader trends like post-pandemic normalisation and reduced international travel. Disney’s losses, which included a $2.7 billion restructuring charge, were less severe than analysts predicted.

Disney highlighted progress in its streaming sector, slashing losses by half compared to a year ago. The company aims to meet its earlier promise of reducing costs by $5.5 billion. While Disney+ subscriptions grew 1% internationally to 105.7 million, there was a 1% decline in the US. The struggling Disney Hotstar service in India saw a 24% subscription drop due to losing cricket broadcasting rights.

Alongside expanding ads on its streaming service, Disney intends to tackle account sharing. Analysts view Disney’s mixed results as indicative of challenges in transitioning to streaming, with some reductions in workforce and content spending to narrow streaming losses.

Despite these challenges, analysts like Paolo Pescatore of PP Foresight do not believe Disney’s results primarily reflect the company’s involvement in cultural debates. He sees the mixed outcome as stemming from the challenges of a traditional media giant’s shift into streaming.


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