Following the news that Disney added 14.4 million subscribers to its Disney+ service last quarter;

Francesca Gregory, Thematic Analyst at GlobalData, a leading data and analytics company, offers her view:

“Disney has now amassed 221 million subscribers across its streaming services, overtaking Netflix and providing some reassurance to investors. However, the company is not immune to the industry’s endemic problem of sky-high content spending with limited profitability. While Disney’s platforms continue to entice subscribers, its streaming business recorded a $1.1 billion loss across the quarter.

“Getting subscribers through the door with a (relatively) cheap and cheerful service was always likely to be the easy part. Reconciling subscriber numbers with content spend will be the real challenge if Disney is to achieve its aim to make its streaming business profitable by 2024. Price hikes of 38% across the Disney+ ad-free version should boost revenue when combined with the rollout of its ad-supported tier.

“Although starting light, Disney will up the ad load of its new tier over time. The tier is aimed at cash-strapped consumers amid the deepening cost-of-living crisis. While this should prevent a mass exodus from Disney’s streaming platforms, slower subscriber growth rates are likely as the service is watered down. While the latest results have given the company breathing room, it remains to be seen if Disney can balance subscriber growth and profitability.”

Hear Francesca Gregory and Sarah Coop discuss this topic in GlobalData’s podcast Instant Insights. Listen to the podcast on Spotify, YouTube, or Apple.