Disney might be losing subscribers to its streaming service – but investors don’t seem worried

Job cuts, restructuring and reorganisations, with a view to saving billions – CEO Bob Iger is good at firing up his Wall Street audience, writes James Moore

Bob Iger is back at the helm of the House of Mouse and keeping shareholders happy (Getty/Disney)

In the eyes of Disney shareholders, Bob Iger can appear to do little wrong.

Results for the second quarter, between October and December, show that Disney Plus, the streaming service the company has bet the House (of Mouse) on, lost money and also subscribers, for the first time. But investors don’t seem overly concerned. Iger knows how to play to his audience.

He served up an 8 per cent rise in revenues, which came to $23.5bn (£19.3bn). Profit rose by 11 per cent to $1.3bn. Those numbers were ahead of analysts’ forecasts

Better still, in the eyes of investors, was the aggressive-looking round of cost cuts and job cuts. A nightmare for those at the sharp end – some 7,000 people, 3.6 per cent of Disney’s workforce – but the fact it comes as part of a plan to save $5.5bn in costs made shares leapt.

Restructuring, reorganisation, busy, busy, busy.

The latter makes some sort of sense. The company will become a three-pronged fork in future with Disney Entertainment, headed by co-chairs Dana Walden and Alan Bergman; sports broadcaster ESPN, overseen by Jimmy Pitaro; and Disney Parks, Experiences and Products.

The latter is Josh D’Amaro’s piece of the pie. It is the pastry. The parks – they hold everything together. An ultra-reliable money spinner whose consumers queue up to get soaked. Even if they grumble a bit about the premiums they are expected to pay, or the queues they have to join if they don’t (or can’t), they still turn up.

This makes it easier for investors to live with the more choppy revenue streams from other parts of the business. Such as Disney Plus. A 2.4 million decline in subscribers – which looked particularly bad in comparison to Netflix, who added 7 million in its fourth quarter.

The latter has just announced plans to force users to set a “primary location” for their accounts, with two “sub accounts” for users who don’t live in that location available for a monthly fee per extra user. This is designed to help clamp down on password sharing and is being trialled in Canada, New Zealand, Portugal and Spain.

There is at least an explanation for Disney’s decline. Disney Plus Hotstar, the offering in India and parts of southeast Asia, was affected by Disney’s loss of the streaming rights to the wildly popular cricketing competition, the Indian Premier League (IPL). Sports rights like that drive numbers when they are won, but bring declines when they are lost. The impact of the loss of the IPL will have been noted. On the other hand, Plus is still growing in the US and Canada.

It is buttressed by its formidable library of content. The animated films and shows children love. The Marvel Cinematic Universe and Star Wars draw all ages. These make subscribers stick around even in the midst of a global cost of living crisis. A number of consumers have taken to cancelling and then adding and then cancelling streaming services based on what they want to watch. It’s easy enough to do.

These services have lately had some success with ad-funded models, made available for a cheaper rate. However, making money from them is still tough because even with recent price rises, they generally represent very good value for the consumer.

Disney still reckons Plus will be in the black in 2024. But the streaming wars will continue to make things hard until a few casualties emerge. Plus could really come into its own when that happens.

Until then, the parks will keep things ticking over as Iger makes his corporate moves – and the company grapples with whom it might find to replace him in the longer term. The last time it tried to do that, with Bob Chapek, it didn’t work out so well.