Disney reports third quarter results, increases streaming prices

The third quarter of FY 2022 earnings for Walt Disney Co. (DIS) were much higher than analysts' consensus projections. Adjusted profits per share (EPS), which exclude certain items, exceeded analyst expectations and increased by 36.3% year over year.

Disney's sales increased by 26.3% YOY, beating estimates as well. Solid performance at Disney's theme parks, and growth in live sports viewing and streaming service subscriptions, according to CEO Bob Chapek, were the main drivers of growth. Additionally, Disney+ subscribers for the quarter exceeded analyst expectations.

For the quarter, Disney+ subscribers increased by 31.1% year over year to a total of 152.1 million. Despite topping analysts' expectations, this growth rate in this key section was the slowest it had been in at least 7 quarters.

Disney+ has expanded quickly in the brief time it has been accessible, but it still only makes up a small portion of Disney's overall revenue. 

Disney is working to update its price options and will soon offer a $7.99 monthly ad-supported tier.

Disney is also increasing Hulu membership costs. The price of the ad-supported version will increase from $6.99 per month to $7.99 per month, while the price of the ad-free tier will increase from $12.99 to $14.99 per month. In October, the pricing structure will take effect. In July, a price increase for ESPN+ streaming was announced, increasing the monthly cost from $6.99 to $9.99.

Disney (DIS) stock has down 28% so far this year.

In its most recent statistics, Disney said that it increased the number of Disney+ subscribers by 14.4 million in the just reported quarter, totaling to 152.1 million—higher than the 147 million analysts had predicted. Its direct-to-consumer sector lost more money than in prior years, though. Disney claims that the losses were caused by growing production expenses for Disney+ and greater sports programming costs for ESPN+.

Disney is in the unique position of being able to increase pricing and add subscribers to Disney+ while minimizing customer churn. In contrast, Netflix is losing customers as a result of repeated price increases. Caleb Silver, Editor-in-Chief of Investopedia, stated that despite this, Disney still needs its theme-park industry to demonstrate higher growth if it hopes to persuade investors that its greatest days are still to come.