Disney's Comeback: Stock Surges Nearly 10% With Streaming Profits Soar

Disney's recent earnings report has sent a clear message to investors: the entertainment giant is back on track. The company's stock surged nearly 10% in premarket trading on Thursday, following the release of its Q4 2024 results. The driving force behind this impressive performance? Soaring streaming profits, led by the success of Disney+ and Hulu.

Disney's direct-to-consumer business, which includes Disney+ and Hulu, reported an operating income of $253 million in Q4 2024, a stark contrast to the $420 million loss in the same period last year. This turnaround can be attributed to a combination of factors, including increased subscriber base, strategic pricing adjustments, and strong content performance.

The increased subscriber base, particularly for Disney+, played a significant role in driving revenue growth and profitability. Disney+ saw a 2% increase in paid subscribers domestically and a 5% rise internationally, ending the quarter with 174 million Disney+ Core and Hulu subscriptions, and over 120 million Disney+ Core paid subscribers. This growth, coupled with increased retail pricing and advertising revenue, contributed to the streaming profits.

The introduction of the ad-supported plan on Disney+ has also been a significant driver of revenue growth and profitability. Around 60% of new subscribers chose the ad-supported plan, with 37% of total US subscribers opting for it. This shift has become a major revenue driver for streaming services, as CEO Bob Iger noted that the pricing increase was designed to move more people to the advertiser-supported side of the platform.

Strong content performance, including blockbuster films like "Inside Out 2" and "Deadpool & Wolverine," further boosted streaming profits. These films contributed $316 million in operating income, helping the direct-to-consumer business achieve profitability for the first time in the third quarter. Disney+ saw a 2% increase in paid subscribers domestically and a 5% rise internationally, with the company's streaming business reporting quarterly operating income of $253 million, compared to an operating loss of $420 million a year earlier.



Disney's strategic pricing adjustments and marketing efforts also contributed to the improved direct-to-consumer business results and increased profitability. By raising prices across its streaming services in October and offering an ad-supported plan, Disney successfully moved more consumers to the advertiser-supported side of the platform. This shift, along with increased subscription revenue and a decline in marketing costs, contributed to Disney+ and Hulu's combined operating income of $253 million, marking the first time the streaming businesses achieved profitability.

In conclusion, Disney's comeback is evident in its recent earnings report, with the company's stock surging nearly 10% due to soaring streaming profits. The success of films like "Deadpool & Wolverine" and "Inside Out 2," along with strong subscriber growth for Disney+, Hulu, and ESPN+, drove the company's streaming business to profitability for the first time in Q4 2024. As Disney continues to innovate and adapt in the rapidly evolving entertainment landscape, investors can expect the company to remain a strong player in the market.