Disney’s streaming business gets closer to becoming profitable

Disney Plus and Hulu posted a profit for the first time today. In Disney’s earnings report released on Tuesday, the company revealed that both streaming services made $47 million combined this past quarter — a huge turnaround from the $587 million loss reported at the same time last year.

But Disney’s streaming business wasn’t entirely profitable. ESPN Plus still lost $65 million, dragging its combined streaming earnings $18 million in the red. Despite this, the narrowing losses mark a huge milestone for Disney as it continues to invest more in streaming. The entertainment company says it expects its streaming business to become profitable in the fourth quarter of this year.

“Our results were driven in large part by our experiences, segments and our streaming business, which achieved an important milestone with the entertainment portion of the streaming business,” Disney CEO Bob Iger said during the call. “We fully expect streaming to be a growth driver for the company in the future.”

Over the past few months, Disney Plus added 7.9 million subscribers in the US and Canada, bringing total subscribers to 54 million. The company launched its combined Disney Plus and Hulu app in March, and now it plans on integrating ESPN Plus into the app, too. During the company’s earnings call, Iger said it’s going to add an ESPN Plus tile to Disney Plus this fall, “giving all subscribers access to select live games and studio programming” within the app.

Disney didn’t specify what prompted the turnaround of its streaming business, but it could have to do with the growth of its ad-supported tier. The company launched the $7.99 per month option in December 2022 and began nudging subscribers toward the tier ever since. Hugh Johnston, Disney’s chief financial officer, said during today’s earnings call that the company’s deal with the cable provider Charter helped drive the growth of its ad-supported tier this quarter, which it ended with 22.5 million subscribers.

Disney also plans on launching a standalone ESPN streaming service in the fall of 2025, along with a dedicated sports streaming service with Warner Bros. Discovery and Fox that’s launching later this year.