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Disney+ Makes No Money (More Like Billions of Dollars Lost)

Mickey Mouse at Disney's Magic Kingdom
Mickey Mouse at Disney's Magic Kingdom. August 2022. Image Credit: 19FortyFive.

What Does it Mean That Disney+ Has Lost Billions of Dollars?: Disney+, ever since it launched in late 2019, has looked in many ways like a big success.

It has added subscribers rapidly, reaching 164.2 million as of the end of the most recent quarter. When Disney’s other streaming services are factored in, the company now has more streaming subscriptions than Netflix.

Still, even Disney+ by itself has been much more successful at attracting subscribers than any of its rivals have been. 

Indeed, Disney seemed better positioned than most to launch a popular streaming service. The company owns or has access to a massive amount of intellectual property, from the Disney animated canon to Marvel to Pixar to “Star Wars,” and its strategy for about a decade prior to the launch of Disney+ was to acquire such property, through its purchases of Lucasfilm, 21st Century Fox, and other companies. 

Owning all of that property has not only placed all of those beloved movies and TV shows in Disney+’s streaming library, but has also given them the right to produce original content, whether remakes, sequels, reboots, or making-of documentaries, based on all of it.

For instance, new content on Disney+ this month includes everything from a TV reboot of the 1980s movie “Willow” to new TV versions of “A Night at the Museum” and “The Santa Clause” to a “Guardians of the Galaxy” holiday special. The new “Avatar: The Way of Water,” heading to theaters this week, will end up on Disney+ eventually; the original “Avatar” was a Fox movie but, due to the Disney/Fox merger, has now become a Disney property. 

Most major media companies have followed a similar strategy, seeking to attract streaming eyeballs and subscriptions as other revenue streams like cable continue to decline.

Disney+ Has a Problem: Billions in Losses 

But the year 2022 showed that this strategy might not be viable. And yes, that includes Disney+. 

This started in April when Netflix announced that it had lost subscribers in a quarter for the first time in its time as a streaming company. Netflix lost even more subscribers in the next quarter, although it gained some back in the third. Meanwhile, Peacock’s subscribers were flat in the second quarter. 

While it did not lose subscribers in 2022, Disney did lose money on Disney+ in the most recent quarter. Disney’s direct-to-consumer division, which includes Disney+, lost $1.5 billion in the quarter. And that is on top of more losses in the past

“The decrease at Direct-to-Consumer was due to higher losses at Disney+ and, to a lesser extent, lower results at Hulu and higher losses at ESPN+,” the company said in its earnings release. “Results at Disney+ reflected higher programming and production costs, increases in marketing and technology costs, and the absence of Premier Access releases in the current quarter, partially offset by higher subscription revenue.” 

Disney’s pandemic-era gambit of releasing new movies as “Premier Access,” in which consumers could pay as much as $30 to see a movie early, has gone away.

That loss of revenue has been significant. One analyst stated that the DTC division had lost about $4 billion in the last year. 

Less than two weeks later, Disney CEO Bob Chapek was suddenly out, and replaced by his predecessor Bob Iger, who had been the architect of that strategy of amassing intellectual property. 

The Wall Street Journal also reported that Disney, in the Chapek era, had employed some method of creative accounting that assigned some shows that had debuted on the Disney Channel to that channel and not Disney+, in order to not assign those costs to Disney+ and minimize losses. 

Disney+ In Trouble? What Happens Next

What’s next?

It appears highly unlikely that Disney+ will go away anytime soon. The company has invested so much in the service, and reoriented its entire strategy around it. The company launched an ad-supported tier earlier this week while also raising prices in another bid toward reaching profitability. There is, however, much speculation that Iger will need to cut costs in order to achieve that goal. 

“This is Disney realizing they are relatively mature, meaning they’ve reached most of the customers who are going to pay for Disney+ and now pushing aggressively on price,” Rich Greenfield of LightShed Partners told CNBC.

 Stephen Silver is a Senior Editor for 19FortyFive. He is an award-winning journalist, essayist, and film critic, who is also a contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Written By

Stephen Silver is a journalist, essayist, and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review, and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.