Walt Disney Co. sounded like a harbinger of the future in the media industry with its latest earnings report which concluded that streaming may one day become the new profit mainstay to supplant the dying model of traditional linear TV. In a call Thursday with investors and analysts, Chief Financial Officer Hugh Johnston said streaming would generate enough operating income to cover fiscal 2025 to offset linear TV income that is steadily declining for Disney.
Improvement in the operations of Disney’s direct-to-consumer streaming services, such as Disney+, Hulu, and ESPN+ could be witnessed, as per projections, because it would increase the operating income from entertainment streaming by about $875 million in fiscal 2025 compared with fiscal 2024 which would push operating income in the division over $1 billion. After all, Disney had reported that entertainment streaming for the entire division lost $2.5 billion just last year.
That growth in profitability in streaming comes as Disney has both cut content spending and grown its subscriber base across all platforms. While Disney’s combined streaming business posted a profit of $321 million for its fiscal fourth quarter, that reflects a larger trend: streaming services are getting financially stronger. For the full fiscal year, Disney’s two main streaming services, including Disney+ and Hulu, also reported a profit, amounting to $143 million.
Although earlier sentiments were aired around streaming as not sustainable in the long term, particularly by producers such as Disney and Comcast, the performance of the company seems to confirm that streaming might be more sustainable than initially thought. Johnston emphasized that Disney is well-positioned for either scenario—whether consumers continue to hold onto linear TV or make the full transition to streaming.
Such an improvement in Disney’s streaming performance follows a wave of similar good news from other media companies, such as Warner Bros. Discovery, which reports high growth in its direct-to-consumer business. The signs suggest that, though hard at this transition, the future may be more resilient and bankable for the industry overall. There was a jump of 6.2% as investors moved to friendly optimism about the earnings report on the transformation in the business model by Disney.
