Disney bets big on streaming as its future

Disney's Streaming Strategy Shows Promising Results

Walt Disney Co. is making a bold move by focusing heavily on streaming, and the early results are showing positive signs. The company recently announced two major deals with the NFL and WWE, which are expected to strengthen its position in the growing streaming market. In addition, Disney has raised its forecast for its streaming business and outlined several upcoming changes that could further boost its performance.

The company exceeded analysts’ expectations in its fiscal third quarter, largely due to a one-time tax benefit and strong growth in both its streaming and theme parks businesses. While traditional television and film divisions continue to face challenges, Disney is increasingly relying on its streaming services to drive future growth.

Disney now forecasts that its streaming business will generate $1.3 billion in operating income for the rest of the fiscal year, up from an earlier projection of $1 billion. This increase is attributed to higher-than-expected subscriber growth. Additionally, the company expects an 8% growth in the operating income of its experiences business, which includes theme parks and cruises, reaching the top end of its previous guidance.

Major Deals with NFL and WWE

Ahead of its earnings release, Disney announced significant agreements with the NFL and WWE to enhance its ESPN+ streaming platform. Under the NFL deal, Disney will take control of the league’s media properties in exchange for a 10% stake in ESPN. These partnerships are part of a broader strategy to expand Disney’s presence in the streaming space.

Bob Iger, Disney’s CEO, highlighted the company’s progress in streaming, citing the upcoming launch of ESPN’s direct-to-consumer service, the new NFL partnership, and the integration of Hulu into Disney+. He also mentioned that Disney is expanding its global parks and experiences at an unprecedented rate.

Subscriber Growth and Pricing Changes

Disney reported that its streaming services, Disney+ and Hulu, added 2.6 million subscribers during the quarter. However, the company plans to stop reporting subscriber figures starting in January 2026, following a similar move by Netflix earlier this year.

Disney also announced plans to integrate Hulu into Disney+, aiming to improve profitability and margins through increased engagement, reduced churn, and advertising revenue. The integration is expected to bring operational efficiencies and potential cost savings that can be reinvested into the business.

In terms of pricing, ESPN+ will launch at the end of August with an unlimited package priced at $29.99 per month. A more affordable bundle will be available for $11.99 per month. Customers will also have the option to purchase a combined package of Disney+, Hulu, and ESPN+ for $29.99 per month for the first 12 months.

Strong Financial Performance

Analysts have responded positively to these developments. Paolo Pescatore of PP Foresight noted that Disney has addressed concerns about its parks and streaming businesses, with the latter showing significant improvement. He also praised the new streaming offerings as a way to drive value and retain customers through innovative bundling.

In the fiscal third quarter, Disney reported net income of $5.94 billion, more than doubling expectations of $2.3 billion. Adjusted earnings per share reached $1.61, surpassing analyst expectations of $1.45. Revenue for the quarter was $23.65 billion, slightly below analysts’ projections of $23.69 billion.

Theme Parks and Stock Performance

Revenue from Disney’s theme parks reached $8.09 billion, up 9.1% compared to the same period last year. Domestic park revenue grew by 10%, while international revenue rose by 5.6%. Despite this growth, the total revenue fell short of analysts’ expectations of $8.19 billion.

The stock experienced a decline of 3.3% in morning trading, hitting a two-month closing low. However, it has recovered from a 26% drop in April, when investor concerns about tariffs and economic policies led to a sell-off. Since then, the stock has shown resilience, rising 2.7% so far this year, compared to a 7.6% gain for the S&P 500 index.