Disney’s price increases are working like magic.
The Mouse House’s streaming business enjoyed record profits in the quarter ending December 27, the company reported on Monday.
Disney+ and Hulu generated $450 million in operating income last quarter, up 72% from a year earlier, and far above the $352 million it brought in during the prior quarter. That beat Morgan Stanley’s estimate of $444 million for Disney’s direct-to-consumer business.
Disney’s streaming revenue rose 11% to $5.3 billion last quarter. Higher subscription fees drove the lion’s share of that increase, growing 13%. Streaming revenue from other sources — including advertising — ticked up by 4%. For the first time, Disney didn’t share its streaming subscriber count or growth.
Price hikes are Disney’s not-so-secret pixie dust, as the company has raised prices for Disney+, Hulu, or both in each of the past five years, most recently in October. The ad versions of both Disney+ and Hulu rose $2 to $11.99 a month, while the ad-free version of Disney+ jumped to $18.99, matching the cost of ad-free Hulu.
It’s a similar story in Disney’s experiences division: the company posted record profits last quarter after raising prices in its parks for the fourth straight year.
It’s not all a fairy tale, however. Viewership growth for Disney’s streaming services hasn’t kept pace with its subscriber gains or price hikes. Disney’s viewership share has barely grown in the US in the past four years, according to Nielsen data based on TV watch time.
Disney has several ideas for improving engagement on its streaming platforms, including AI-generated content, short-form video, and a new homepage.
Although Disney slightly beat Wall Street’s overall revenue and earnings estimates, its stock slipped about 2% in premarket trading as the company disclosed some weakness in its parks business among international guests.
Read the original article on Business Insider
The post Disney reeled in record streaming profits, boosted by price hikes appeared first on Business Insider.
