If you want to read The Walt Disney Company’s Q3 earnings report
The Walt Disney Company reported its earnings for the third quarter. Earnings per share were $1.39 per share compared to the $1.19 that was expected. Disney’s revenue came in at $23.16 billion compared to the $23.07 billion that was expected.
Disney+ now has 153.8 million subscribers. Disney expects to see modest growth for Disney+ Core subscribers in Q4.
So let’s address this right away. Disney has changed how they do these earnings calls. Instead of remarks and the typical Q&A, it’s now a written executive commentary rather than a Q&A. There are some pros and cons to this. The pro is that you have things in writing, the con is that you miss out on Iger and Hugh’s tone and the potential for extra information on certain subjects. It’s then left up to the financial analysts to pry more info out of them.
Disney CEO Bob Iger and Disney CFO Hugh Johnston kicked off their commentary by discussing Disney’s box office rebound with the trio of hits being Inside Out 2, Deadpool and Wolverine, and Kingdom of the Planet of the Apes. The films have earned a collective $2.8 billion worldwide. Inside Out 2 also made history as the highest-grossing animated movie ever with $1.5 billion. Disney also touted Deadpool and Wolverine’s strong performance.
Then Disney ran through its upcoming theatrical slate which includes Moana 2 and Mufasa: The Lion King in 2024. In 2025, Disney’s theatrical slate remains robust with Captain America: Brave New World, Thunderbolts*, The Fantastic Four: First Steps, Zootopia 2, and Avatar 3. Disney then highlighted 2026 featuring Avengers: Doomsday, The Mandalorian and Grogu, and Toy Story 5.
Disney highlighted how its franchises have a multiplier effect across Disney’s entire company, providing benefits to our theme parks, cruises, consumer products, and streaming businesses. We will dive more into this specifically later in our piece but one example regarding Disney+ they highlighted involved how theatrical could boost Disney+.
For example, in the lead-up to and following the theatrical release of Inside Out 2, millions of viewers turned to Disney+ to watch the original Inside Out film from 2015, driving over 1.3 million Disney+ sign-ups and generating over 100 million views of the original film globally since the first Inside Out 2 teaser trailer dropped. With the release of Deadpool & Wolverine, Disney has seen heightened viewership with the original Deadpool films, and Disney expects similar engagement with the upcoming releases of Moana 2 and Mufasa: The Lion King. Disney says theatrical success now translates into helping streaming.
If I was Disney I’d lean hard into this. I think additional content from Inside Out 2 and Deadpool & Wolverine would do well on Disney+ whether it was a documentary or deleted scenes. I think a Moana 2 docuseries could be fascinating although it would probably shy away from the true story (that being it was a Disney+ series transformed into a theatrical film). I think a documentary centered around Barry Jenkins and Lin-Manuel Miranda joining The Lion King family would be fun as well.
Disney also took some time to highlight its impressive Emmy nominations performance with Shōgun, The Bear, Only Murders in the Building, and Abbott Elementary leading the way. Disney says its multi-platform approach of linear and streaming is working.
Disney’s combined streaming business (Disney+, Hulu, ESPN+) was profitable in Q3. That was one quarter ahead of schedule. Disney+ is still on track to be profitable on its own at some point. Disney is aggressively pursuing more ways to make money from its streaming services. However one has to wonder how they will balance the books when they have to ramp up content again. Maybe Disney+ having limited original content becomes the new normal? It’s a weird equation Disney has to solve.
Disney Experiences
Disney Experiences revenue grew 2% year over year, while segment operating income came in short of Disney’s prior guidance, declining by 3% in the third quarter.
Segment revenue growth was impacted by demand dying down by the end of Q3. Results at Domestic Parks decreased modestly in the quarter, attendance was comparable year over year, and per capita spending was slightly up. Disney CFO Hugh Johnston acknowledged you’ll see less demand from the domestic parks in the next few quarters. I’d say Disney is taking a cautionary approach as the economy struggles and Universal Epic Universe is on the horizon.
Disney Streaming
Disney this quarter decided not to divulge how many subscribers ESPN+ has. Maybe this is due to Venu Sports and the flagship ESPN streaming service coming out.
Advertising revenue at Entertainment Direct-to-Consumer increased by 20% versus the prior year, reflecting growth across Disney+ Hotstar, Disney+ Core, and Hulu. In Q3, Disney’ number of domestic streaming advertisers grew by more than 20% versus prior year, largely driven by automation, while programmatic revenue growth increased by over 80%. Disney+ Core subscribers grew more than expected, with approximately 700K net adds in the third quarter.
Domestic Disney+ average monthly revenue per paid subscriber decreased from $8.00 to $7.74 due to the impact of subscriber mix shifts. International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber increased from $6.66 to $6.78 due to increases in retail pricing, partially offset by an unfavorable foreign exchange impact. Disney+ Hotstar average monthly revenue per paid subscriber increased from $0.70 to $1.05 due to higher advertising revenue. Hulu SVOD Only average monthly revenue per paid subscriber increased from $11.84 to $12.73 due to higher advertising revenue. Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $95.01 to $96.11 due to higher advertising revenue.
Final Thoughts
One of the biggest takeaways from today’s earnings call is the potential turbulence in the Disney Experiences division. It’s clear the domestic parks can no longer rely on that post-pandemic, revenge travel that was powering their businesses.
Disney CFO Hugh Johnston said to expect flattish revenue for the division for the next few quarters. Still, flattish revenue for the Parks division will probably be better than the Studios. I think Disney’s strategy for the next few quarters will be evaluating its prices at the Disney Parks. I’d expect some major discounts and enticing offerings to appear during this time. The reality for the domestic resorts (Walt Disney World and Disneyland) is we are more than a few quarters away from projects that will act as potential vacation draws (Avengers E-Ticket & Tropical Americas could be considered trip-booking draws). When it comes to Disney Experiences, Disney remains confident in the long-term growth of the division despite recent economic uncertainty.
Disney Cruise Line is still seeing strong demand despite all the potential turbulence in the Disney Experiences division. Disney however warned that pre-launch expenses for the Disney Adventure and Disney Treasure will come in fiscal Q4. Disney Destiny will also arrive in 2026. Oriental Land Company is also bringing Disney Cruise Line to Japan, and it is now rumored that there will be more than one ship being built for OLC.
Iger was asked how profitable ESPN’s deal with the NBA would be and how soon it could make back the money. For context for non-sports fans, Disney/ESPN paid for the “A” package for the NBA, which means Disney has the best package of games and will be host of the NBA Finals (the main draw) for years to come. Disney will pay the league, $2.6 billion annually. The question was legit. Iger sees tremendous value in the deal and he seems confident the NBA will continue to draw advertisers and could bolster multiple Disney streaming services. I’m more curious if Disney/ESPN will end up having to pay the WNBA more than what is included in its current NBA deal.
Iger then turned his focus to Disney+ where he discussed how it could be a unified streaming experience and how Disney is taking the steps to get there. Iger mentioned efforts like Hulu on Disney+, the ESPN tile, and the addition of ABC News Live channel — err continuous playlist.
Iger then talked about the continous playlists but he called them channels. So if Iger is calling them channels can we please just call them channels? He talked about how it would be another way for premium subscribers to increase engagement. Iger also mentioned how Disney is investing way more in creating better recommendation technology.
Disney CFO Hugh Johnston believes the bundles are reducing churn. Disney’s latest bundle is with Warner Bros. Discovery’s Max. This will be an interesting space to watch. I think this new bundle alongside the duo package of Disney+ and Hulu works. I think my biggest interest is how Disney could add ESPN to it. I think the big money would be for Disney to offer a Disney+ that just has Hulu and ESPN content already attached and imagine if you bundle that with Max and AppleTV+? Disney’s other bundle route could include different divisions of its business. Disney+ & Disney AP bundle? Disney+ & D23 bundle? It may be wise to revisit the Disney Prime idea that got close to execution in the Chapek Era.
Iger confirmed ESPN is still talking to partners and that he wants a partner who could possibly help with content. To me that could only mean the sports leagues. Yet that would be a media nightmare and could potentially bring the leagues under fire from different media partners. To me, I feel like the only strategic partners that ever made sense for ESPN were Amazon and Apple. Both are tech giants who are increasing their sports streaming presence and could technically utilize ESPN’s graphics and productions to make their presentations feel normal to sports fans.
Disney at the end of the Q&A call released an earnings presentation filled to the gills with some intriguing info about their franchises. Disney highlighted how their ecosystem allows fans to watch, stream, visit, play, and purchase merch from their favorite franchises. Disney then listed a few select franchises as examples and included Cars, Frozen, Star Wars, Toy Story, Avengers, Mickey Mouse, Moana, Inside Out, Avatar, The Simpsons, The Lion King, and Pirates of the Caribbean.
Disney within the same presentation continued to highlight how these franchises have a multiplier effect across all their businesses. Disney then showed upcoming investments to the Experiences and the slide looked a bit light but Disney was aware enough to include a blurb that said they would be announcing new stuff over the weekend at D23.
Disney is making streaming a legitimate business against all odds. Now that they have the entertainment and streaming engines back up and running, they have to focus on Experiences. Disney can’t afford to lose its most reliable division amidst its comeback. I suspect D23: The Ultimate Disney Fan Event will answer a lot of our burning questions.
Lightning Round
Be sure to continue to follow Boardwalk Times for more coverage of The Walt Disney Company.
Support Boardwalk Times on Ko-Fi.
Support Boardwalk Times by shopping on Boardwalk Store:
If you like this article. Subscribe to my free newsletter Boardwalk Times: Stories from the Seashore, a monthly dose of Disney, its businesses, and the wider themed entertainment industry.
Zach Perilstein is the Editor-in-Chief of the Boardwalk Times
