Disney(NYSE: DIS) is the largest name in global entertainment, and that's not limited to its unmatched theme parks. It has an equally impressive content library, most of which is available to watch on its flagship Disney+ premium streaming channel.
Although streaming is an incredibly crowded field, Disney quickly became a leader in the space, and it remains one to this day. However, skyrocketing expenses in the streaming business led to a major shakeup at the company last year with Bob Iger regaining the title of CEO and major efforts to cut costs at Disney+. In the meantime, subscriber growth has slowed. There's a lot going on, but this chart clearly illustrates why investors should still have confidence in Disney's streaming future.
It's all about the subscribers
Part of the problem for the entire streaming industry is that there's a limited number of eyeballs. Disney entered streaming at a relatively early phase, but every major studio wanted in on this opportunity. Most of the early-stage growth has been claimed, and now, streaming services are competing for the same viewers in a saturated market.
That doesn't mean there isn't any growth potential. Subscribers to multiple services are more selective, especially as prices continue to increase. But Disney can capitalize on its industry reach and position to impress current viewers, retain them, and keep subscriber counts moving in the right direction.
Investors can get caught up in the quarterly numbers, but it's much more important to focus on long-term trends. Disney+ has been able to steadily increase its subscriber count since launch, and more to the point, that's expected to continue going forward.
Disney made a commitment to cut costs, and operating losses for the streaming business contracted from $984 million in its fiscal 2023 first quarter to $138 million in the latest report. Iger said streaming should be profitable by the end of fiscal 2024. As Disney gets costs under control and keeps subscribers coming, it should stand out from the pack as a winner of the streaming wars.
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Jennifer Saibil has positions in Walt Disney. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool has a disclosure policy.
