WALT Disney said on Wednesday it would raise prices of its streaming service Disney+ in October, the second price hike this year, and CEO Bob Iger emphasised the company's efforts to keep a lid on costs as he tried to reassure investors.
Iger, who returned for a second stint running Disney, said in a statement that Disney was undergoing an "unprecedented transformation" to help it become more efficient.
"I can't emphasise enough the time that we spent, and the effort that we spent, on managing costs," Iger told analysts on a conference call, referring to the company's streaming business.
"We have done a tremendous job in a very, very short time."
Iger, who faces formidable challenges on nearly all fronts of the entertainment empire, acknowledged that Disney still has work to do to make the streaming business profitable.
Looking for ways to attract and retain subscribers in a competitive streaming market, Disney also announced it would launch ad-supported streaming in Europe and Canada and provide US subscribers with a new, ad-free package in coming months.
Iger said he would address the issue of password sharing next year, echoing Netflix, which has cracked down on password sharing in the United States and beyond, alerting users that their accounts cannot be shared for free outside of their households.
He said Disney will reduce the number of titles it releases and also the cost per title.
REVENUE JUST MISSES
Disney said it cut losses at its streaming video services to US$512 million in its fiscal third quarter, narrower than its loss of about US$1.1 billion a year ago.
It added 800,000 Disney+ subscribers, 100,000 subscribers shy of analyst estimates, and shed 12.5 million subscribers to the Disney Hotstar service in India, or nearly a quarter of its subscribers, as it gave up rights to Indian Premiere League cricket matches.
"Disney will have to cut prices from current levels in an effort to stimulate demand and defend its market share in an increasingly competitive industry," said Jesse Cohen, senior analyst at Investing.com.
"The streaming space is certainly feeling the pinch of persistently high inflation which has forced consumers to make changes to their spending habits as disposable income shrinks."
Paolo Pescatore, analyst at PP Foresight, echoed that Disney will have to focus on attracting new streaming subscribers and managing costs as it transitions from its traditional core business to streaming.
Disney's traditional television business continued its decline. Higher sports programming production costs and lower affiliate revenue dragged down the performance of its cable channels. TV revenue fell seven per cent to US$6.7 billion, while operating income fell 23 per cent to US$1.9 billion.
Content sales and licensing, the unit that includes film and television sales, reported a deeper operating loss of US$243 million in the quarter, compared with a loss of US$27 million a year ago. The quarter included the release of "Guardians of the Galaxy Vol. 3," which performed less well at the box office than the prior year's "Doctor Strange in the Multiverse of Madness".
Also released during the most recent quarter was the live-action remake of "The Little Mermaid," which disappointed. --REUTERS