Disney+ Loses Subscribers, but Streaming Business Turns a Profit

The Walt Disney Company reported its Q1 FY25 earnings, revealing a loss of 700,000 Disney+ subscribers over the final three months of 2024. This drop brings Disney+ Core (excluding Hotstar) to 124.6 million subscribers, reflecting the impact of price increases and the expiration of certain promotions.

Despite the subscriber decline, Disney’s Direct-to-Consumer (DTC) segment posted a profit of $293 million, an improvement of $431 million year-over-year. Streaming revenue grew 9% YoY to $6.07 billion, driven by price hikes that boosted Average Revenue Per User (ARPU) across Disney+ and Hulu.

Hulu stood out as a bright spot, adding 1.6 million subscribers, bringing its total to 53.6 million. ESPN+ also lost 700,000 subscribers, continuing a trend of fluctuating growth in sports streaming.

CEO Bob Iger highlighted the company’s focus on streaming profitability and strategic initiatives, including the addition of an ESPN tile within Disney+, signaling deeper integration of its streaming assets.

Financially, Disney exceeded Wall Street expectations, reporting $24.7 billion in revenue and adjusted EPS of $1.76, both above analyst forecasts.

INSIDER TAKE:
Disney’s Streaming Pivot & Industry Impact

Disney’s Q1 FY25 results highlight a critical shift in the subscription industry: profitability now outweighs pure subscriber growth. This is a departure from the “land grab” phase that defined streaming’s early years, where services prioritized rapid expansion over financial sustainability.

While price increases successfully boosted ARPU, the tradeoff was higher churn, leading to subscriber losses. This underscores a key challenge for subscription businesses: how much can you raise prices before customers start canceling?

The Disney+ decline isn’t an isolated case. Other streaming services have also faced pressure as consumers reassess the value of their subscriptions amid rising costs. Disney’s strategy signals a larger industry trend—subscription businesses must balance revenue growth with retention, ensuring customers see enough value to stay.

For the subscription industry, this serves as a reminder that price hikes must be accompanied by meaningful value enhancements, whether through bundling, premium offerings, or exclusive content. Disney’s approach—integrating ESPN into Disney+ and leveraging Hulu’s strength—offers insight into how subscription businesses can retain users while optimizing revenue.