Disney is banking on a password crackdown and spate of sequels as it pushes to make its streaming business profitable.
The company, which is under pressure as audiences move away from traditional pay-TV and cinema, said it was on track to meet its goals after new subscribers and price rises helped to narrow losses in its streaming business.
Disney+ gained more than six million subscribers globally between January and March, excluding India. The streaming service now has more than 117 million subscribers.
The increase is important for a service that has seen growth flag in recent months but is viewed as critical to Disney’s future.
However, Disney’s share price tumbled by more than 8% with investors remaining wary of its prospects.
Disney told investors that a planned password crackdown, which will start in some countries this summer and roll out globally in September, should help drive subscriber sign-ups in the months ahead.
It is also hoping a number of sequels bring fans to the box office.
Disney has follow-ups to its Moana and Inside Out movies as well as sequels for Planet of the Apes and Deadpool.
Chief executive Bob Iger, whom Disney brought out of retirement in 2022 to boost profits and investor confidence, admitted that the company was “swinging back a bit to lean on sequels” after a period in which some of its new films flopped.
“Given the competition in the overall movie market, there’s a lot of value in sequels obviously because they’re known and cost less in terms of marketing,” he said.
Mr Iger added that the company would strike a “balance” with new films, while cutting back on Marvel films and television shows to ensure what is produced is higher quality.
Disney’s sprawling empire, which includes news stations, sports-focused ESPN as well as theme parks and cruise lines beyond its film and television studio, has been buffeted by changes in the entertainment industry.
Mr Iger recently fended off a campaign by investment groups, which had accused the company of being slow to respond.
In the most recent quarter, revenues in Disney’s traditional television business continued to drop, falling 8%, as subscribers cancelled and advertising declined.
But Mr Iger said his turnaround plan was working, noting that Disney+ reported an operating profit of $47m in the first three months of the year, compared with a loss of $587m in the same period a year ago.
Including ESPN+ and Hulu, home to hits such as Shogun, operating losses for its streaming businesses narrowed to $18m in the quarter from $659m a year ago.
“It’s extremely rare in streaming to hear the word ‘profitable’ but Disney finally achieved it, kind of,” said Mike Proulx, research director at Forrester.
“This is a big turning point for Disney and for the streaming market in general so long as content quality and frequency don’t get compromised,” he added.
Revenue in the company’s experiences division, which includes its theme parks and cruise lines, grew 10%.
It warned investors that it was seeing signs that travel was moderating from the post-Covid boom, but said it expected growth to rebound later this year.
Overall, the company said revenue rose about 1% to $22.1bn.
It reported an overall loss of $20m, which was affected by a $2bn charge related to the merger deal it struck for its business in India, which has struggled after it lost key rights to show certain cricket matches.
