Disney reported losing four million subscribers to its Disney+ streaming service on Thursday, which led to a 9% decline in the value of its stock.
The market value of the massive entertainment corporation was anticipated to plummet by about $15 billion as shares of the business dropped to about $92.
Disney+ Subscription Drop Unsettles Investors in Q2 Results
Despite its reporting profit and revenue for the second quarter in line with Wall Street expectations, the share price has fallen.
Investors were alarmed by the dramatic drop in its subscribers, which demonstrated that the streaming industry is still a long way from becoming profitable.
The service has 157.8 million users at the end of the quarter, down from 161.8 million in December 2022.
This is in contrast to forecasts that it would increase continuously to over 163 million.
The business lost roughly 300,000 customers in the US and Canada, while cancellations in India had a particularly negative impact on its overall user base.
The site’s loss of the ability to stream cricket from the Indian Premier League, according to the Wall Street Journal, was a contributing factor in this.
Reduced marketing expenditures and recent price increases at Disney, whose ad-free premium offering soared to $10.99 per month, and the introduction of a basic offering with advertisements for $7.99 per month, offset the decline.
The prices of all major streaming providers are increasing.
As the cost of living crisis strikes and the pandemic boom wanes, all major streaming services are facing increasing pressure to retain consumers.
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Disney CEO Reveals Pricing Elasticity Despite Subscriber Drop
The recent price hike for the non-ad-supported version of it was described as de minimis by Chief Executive Robert Iger, the outlet reported.
On a teleconference with analysts on Wednesday, he allegedly stated, “It leads us to conclude that we, in fact, have pricing elasticity.”
Iger allegedly added that Disney would integrate Hulu content into the US by the end of the year, but that standalone streaming services like ESPN+ would still be accessible.
Yet according to Paul Verna, principal analyst at the research firm Insider Intelligence, Disney Plus is still struggling because of cuts to its advertising budget, fierce market rivalry, and ongoing economic uncertainties.
It expects to raise prices again later this year, but there won’t be much more room for hikes after that.
It comes as Iger adopted a fresh stance in the conflict between the organization and Florida Governor Ron DeSantis.
The head of Disney cautioned that the Republican governor’s criticisms would jeopardize his plans to invest $17 billion and add 13,000 new jobs to Disney World.
Iger did not specifically reference DeSantis or state outright that Disney is rethinking the investment during a teleconference with the company’s shareholders on Wednesday.
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