“The pricing changes we’ve already implemented have proven successful,” said Iger.
Disney+ lost four million global subscribers during the first three months of 2023—its second consecutive drop—dipping to 157.8 million. The U.S. and Canada lost 300,000 subscribers, with the majority of churn coming from Disney+ Hotstar.
CFO Christine McCarthy attributed the domestic drop to “continued impacts” from the prior price increase.
“We were pleasantly surprised that the loss of subs due to what was a substantial increase in pricing for the non-ad-supported Disney+ product was de minimis,” said Iger. “That leads us to believe that we in fact have pricing elacsticity.”
Hulu added 200,000 subscribers to reach 48.2 million, and ESPN+ gained 400,000 to hit 25.3 million subscribers.
Say goodbye to (some) content
Disney is also set to remove “certain content” from its streaming platforms, according to McCarthy. The company is bracing for an incoming impairment charge of $1.5 to $1.8 billion, coming in the third quarter.
“Going forward, we intend to produce lower volumes of content in alignment with this strategic shift,” McCarthy added.
According to Iger, the company realized that much of the content it created has not been driving subscriber growth, and Disney will be getting “much more surgical” about what it produces.
“As we look to reduce content spend, we’re looking to reduce it in a way that should not have any impact on at all on subs,” said Iger. “We believe that there is an opportunity for us to focus more on real sub-drivers.”
“When you make a lot of content, everything needs to be marketed,” he added. “You’re spending a lot of money marketing things that are not going to have an impact on the bottom line, except negatively, due to the marketing costs.”
Disney’s DTC department lost $659 million in the quarter, an improvement from the $1.05 billion it lost last quarter. And while McCarthy anticipates wider losses in the third quarter, the executive reiterated that 2022’s fourth quarter $1.5 billion DTC drop should be peak losses.