Disney’s stock tumbled after the entertainment giant reported a $1.5 billion loss from its Disney+ streaming unit in its fiscal fourth quarter, more than twice the deficit reported from streaming during the same period in 2021. The magnitude of the loss sparked a steep and immediate decline in Disney’s share price, tumbling to its lowest close since March 2020.
CEO Bob Chapek accentuated the positive, by pointing out that the company’s streaming services added 14.5 million new subscribers during the quarter. “The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally.” However, Wall Street has increasingly turned its attention to profitability over market share, with virtually all major media companies taking steps to cut costs in order to improve the bottom line.
Chapek expects Disney’s streaming businesses to turn a profit by 2024, by continuing to increase its subscriber count, raising the monthly price for subscriptions, and generating new revenues from a new ad-supported tier of service for Disney+.
Many investors are unconvinced, with CNBC’s investment guru Jim Cramer calling for Chapek’s firing. “There is just no doubt that he has to go. The way he handled it, he made it sound like it was a four-star quarter. Delusional.” Certainly, all major studios and entertainment companies are feeling the pressure to turn the corner on profitability, after years of emphasizing expansion into streaming and other new-media ventures.