Disney’s trading company, Walt Disney Co (DIS.N), missed Wall Street’s earnings forecasts on Tuesday after the entertainment company incurred additional losses from its push into the video streaming service Disney+.
To catch up to the likes of Netflix, Disney has spent billions of dollars to develop its streaming options, its flagship service Disney+ surpassed analysts’ estimates for the number of paying streaming customers, reaching just over 164 million paying subscribers by September.
Unfortunately for Disney, investors tend to focus more on profits over subscription numbers, with the news tumbling Disney’s shares by as much as 9% on Tuesday.
Other media companies are also struggling to expand their streaming services while meeting Wall Street’s profit targets. Paramount+’s third-quarter results also showed growth, but their revenue missed analysts’ projections and subsequently tumbled the shares of their trading company Paramount Global (PARA.O).
Disney currently offers three streaming services, Disney+, Hulu and ESPN+. They’ve managed to build their total subscription numbers to as high as 235 million paying customers, with Hulu responsible for 47.2 million and ESPN+ bringing in a further 24.3 million.
Disney doesn’t expect next year to start bringing in the profits from their streaming services just yet, with their Chief Executive Robert Chapek saying “We expect our DTC operating losses to narrow going forward and Disney+ will still achieve profitability in fiscal 2024. Assuming we do not see a meaningful shift in the economic climate.”
Disney has plans to release an ad-supported version of their Disney+ service, which will bring in another source of revenue to help cover the billions of dollars already spent on their streaming services.